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Morning Softs 10/24/17


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COTTON
General Comments: Cotton was sharply higher on forecasts for cold weathe4r at the end of this week in Texas and on reports of higher than expected subsidy payments for Indian producers. The weather could get cold enough to freeze the crops and some Cotton could be lost. Mature Cotton would not be affected, but Green bolls would be damaged and lost. The Indian subsidies will be higher than trade expectations and ideas are that the US could see new demand due to higher Indian prices that will need to be charged now. The harvest ahead seems to be the most important factor as USDA is expecting a huge crop. Bolls are opening and harvest is expanding under relatively good conditions as it has been relatively dry. Good harvest weather is expected this week.
Overnight News: The Delta and the Southeast should get dry weather. Temperatures should average mostly above normal. Texas will see mostly dry conditions. Temperatures will be mostly above normal. The USDA average price is now 67.84 ct/lb. ICE said that certified stocks are now 2,343 bales, from 2,344 bales yesterday.
Chart Trends: Trends in Cotton are mixed. Support is at 6900, 6860, and 6830 December, with resistance of 6970, 7000, and 7040 December.

Crop Progress
Date 22-Oct 15-Oct 2016 Avg
Cotton Bolls Opening 87 82 92 91
Cotton Harvested 37 31 38 35
Crop Condition
Very Poor Poor Fair Good Very Good
Cotton This Week 5 9 30 42 14
Cotton Last Week 5 8 29 43 15
Cotton Last Year 4 12 36 39 9

FCOJ
General Comments: FCOJ closed lower on some speculative selling. Futures are still reacting to t the USDA reports that showed big production loss potential from the hurricane, but not the losses expected by the trade. USDA is expected but many to show further dramatic cuts in production in coming reports, but any further cuts might be part of the price already. There are no other damaging storms on the horizon, although a System located off Costa Rica is expected to move north and could Bering rains later this week. Ideas remain that the Orange groves are badly damaged in Florida due to Irma. Crops in many areas were almost completely destroyed. Other areas suffered losses of 50% or more of the crop. Some growers say that trees will be stressed again next year due to the winds and rains from Irma. The demand side remains weak and there are plenty of supplies in the US. Trees that are still alive now are showing fruit of good sizes, although many have lost a lot of the fruit. Brazil crops are stressed from hot and dry weather.
Overnight News: Florida should get chances for showers today, then dry weather and storms and near normal temperatures. Brazil should get mostly dry conditions and near to above normal temperatures.
Chart Trends: Trends in FCOJ are mixed to up with objectives of 158.00, 163.00, and 165.00 November. Support is at 149.00, 146.00, and 142.00 November, with resistance at 155.00, 159.00, and 160.00 November.

COFFEE
General Comments: Both markets were lower again yesterday on what appeared to be speculative selling tied to some forecasts for showers this week in Brazil Coffee areas. The precipitation is expected to be light and might not help all that much. Trends are still mostly down on the charts in New York, but an increasing amount of the trade is interested in buying the break and establishing long positions. London charts show the potential for an up trend, but are mostly sideways for now. Ideas that the coming Brazil crop could be big remain, even through Coffee areas remain generally dry. Trees remain stressed and there are concerns that flowers could be aborted. Most areas will need to see some consistent rainfall now to keep the potential for a big crop alive as trees need to recover from stress from the production year last year and also the cold and dry Winter. The weather in Brazil and the condition of the trees is getting attention as La Nina is coming and Coffee areas are already dry. There are still reports of defoliation to trees, and that does not support ideas of big production potential down the road.
Overnight News: Certified stocks are higher today and are about 1.890 million bags. The ICO composite price is now 119.76 ct/lb. Brazil will get showers each day. Temperatures should average near to above normal. Colombia should get scattered to isolated showers. Central America and southern Mexico should get scattered showers and storms. Temperatures should average near to above normal.
Chart Trends: Trends in New York are mixed to down with no objectives. Support is at 123.00, 121.00, and 119.00 December, and resistance is at 128.00, 130.00 and 133.00 December. Trends in London are mixed to up with objectives of 2030, 2090, and 2090 November. Support is at 2000, 1970, and 1960 November, and resistance is at 2040, 2060, and 2080 November.

SUGAR
General Comments: Futures were lower in both markets again yesterday. Trends are trying to turn down again on the daily charts, but have not broken some important Support areas yet. Weekly charts also show trading ranges, and the market is showing little volume and little reason to go anywhere. Traders remain generally bearish on ideas of strong world production and lackluster demand.. There was some talk of Far East demand that is now being filled by India and the Middle East due to higher prices from Thailand. But there does not seem to be any big demand coming from any real direction, especially as China has cut back on imports. The fundamental side of the market remains mostly negative due to ideas of big world production. Brazil has turned dry after recent rains, and more rain is needed after the dry Winter. Some showers could appear early this week. China has had some variable weather that could cut production, but still has plenty of Sugar in storage. Upside price potential is limited as there are still projections for a surplus in the world production,and these projections for the surplus seem to be bigger.
Overnight News: Brazil should feature warm temperatures and scattered showers. China imported 161,771 tons of Sugar in September, down 67% from last year. Calendar year to date imports are now 1.8 million tons, down 30% from last year.
Chart Trends: Trends in New York are mixed. Support is at 1380, 1350, and 1320 March, and resistance is at 1410, 1430, and 1450 March. Trends in London are mixed. Support is at 366.00, 359.00, and 354.00 December, and resistance is at 375.00, 377.00, and 380.00 December.

DJ Brazil Center-South Sugar Crush Up 0.7% in 1H October
By Jeffrey T. Lewis
SAO PAULO–Brazilian sugar mills in the country’s center-south region crushed slightly more cane in the first half of October compared with a year earlier, according to industry group Unica.
Center-south mills crushed 32.4 million metric tons of cane in the period, a rise of 0.7% from the same period a year earlier. They produced 2 million tons of sugar, down 12.3%, and made 1.6 billion liters of ethanol, an increase of 11.6%.
The production mix for the first half of this month was 43.8% sugar to 56.2% ethanol. A year earlier, the mix was 49.6% sugar and 50.4% ethanol.
Brazil is the world’s biggest sugar producer and exporter, and the center-south grows about 90% of the country’s cane.
In the season from April 1 through Oct. 16, mills in the region crushed 499.6 million tons of cane, down 1.7% from the same period a year earlier. Sugar production rose 3.6% to 31.2 million tons, and ethanol output fell 1.7% to 21 billion liters.
The production mix for the season through Oct. 16 was 47.9% sugar to 52.1% ethanol. A year earlier, the mix was 46.5% sugar and 53.5% ethanol.

COCOA
General Comments: Futures closed lower again yesterday. Futures in New York are testing into Support áreas again, so today could be an important day for short term market direction. The trends are mostly up in New York and in London on both the daily and weekly charts, although the weekly charts show that some important resistance is just ahead at about 2180 New York December. World production ideas remain high. Harvest reports show good to very good production will be seen this year in West Africa. Ghana and Ivory Coast expects a very good crop this year. Nigeria and Cameroon are reporting good yields on the initial harvest, and also good quality. The growing conditions in other parts of the world are generally good. East Africa is getting better rains now. Good conditions are still seen in Southeast Asia. Traders talk of increased demand to go against big world production as prices are now attractive for grinders and chocolate manufacturers.
Overnight News: Scattered showers and storms are expected in West Africa. Temperatures will average near to above normal. Malaysia and Indonesia should see mostly dry conditions. Temperatures should average above normal. Brazil will get mostly dry conditions or light showers and near to above normal temperatures. ICE certified stocks are lower today at 4.236 million bags.
Chart Trends: Trends in New York are mixed to up with objectives of 2220, 2280, and 2370 December. Support is at 2100, 2070, and 2030 December, with resistance at 2160, 2210, and 2230 December. Trends in London are mixed to up with objectives of 1620 December. Support is at 1560, 1530, and 1520 December, with resistance at 1610, 1630, and 1650 December.

 

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About the author


Jack Scoville is a futures market analyst specializing in grains, softs, rice, oilseeds, and tropical products such as coffee and sugar.

He offers brokerage services to an international clientele of agricultural producers, processors, exporters, and other professional traders.

Jack writes daily comments of the many products he specializes in, in three languages, English, Spanish, and Portuguese.

He has been quoted by most major wire services including Dow Jones, AP, and Reuters. His comments have also appeared in newspapers around the world and on various radio and television shows.

Jack offers a dedicated and high quality service for his clients. His industry contacts in South America, Europe, Asia, and North America provide him with a unique view of the markets. He also uses his own charting program for technical traders.

Jack began working in the futures industry over 30 years ago and spent 10 years working on the floor of the Chicago Board of Trade in various roles. He has been a broker off the floor since then and has been with The PRICE Futures Group since it was established in 1988.

Contact Jack Scoville: (800) 769-7021 or at jscoville@pricegroup.com

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