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Morning Softs Report 10/26/17


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COTTON
General Comments: Cotton was mixed in consolidation trading. Nearby months were lower as the US harvest shows progress, but deferred months were a little higher as the market thinks about better demand and potentially some crop losses. The Texas 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 except for precipitation on Friday. Temperatures should average mostly below normal. Texas will see mostly dry conditions. Temperatures will be mostly below normal. The USDA average price is now 67.40 ct/lb. ICE said that certified stocks are now 2,047 bales, from 2,047 bales yesterday. USDA said that net Upland Cotton export sales were 289,100 bales this year and 46,800 bales next year. Net Pima sales were 16,200 bales this year and 0 bales next year.
Chart Trends: Trends in Cotton are mixed. Support is at 6900, 6860, and 6830 December, with resistance of 7000, 7020, and 7040 December.

FCOJ
General Comments: FCOJ closed higher, but remains in a trading range. There are no new damaging storms on the horizon, although a System located off Costa Rica is expected to move north and could bring 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 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. Support is at 150.00, 149.00, and 146.00 November, with resistance at 156.00, 159.00, and 160.00 November.

COFFEE
General Comments: Both markets were higher in range trading. The charts show the chance for a doublé bottom, but no one seems to think that it will happen. The trade is waiting to see the precipitation in Brazil. 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. London charts are sideways. Ideas that the coming Brazil crop could be big remain, even through Coffee areas remain generally dry. 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.
Overnight News: Certified stocks are higher today and are about 1.898 million bags. The ICO composite price is now 119.13 ct/lb. Brazil will get showers through Saturday, then drier weather. 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. Support is at 1980, 1970, and 1960 November, and resistance is at 2040, 2060, and 2080 November.

SUGAR
General Comments: Futures were lower in consolidation trading. The market is holding at higher levels in response to indications from Unica of less Sugar production. UNICA showed increased cane crushing but less Sugar production as mills focussed on Ethanol production. Trends are sideways on the daily charts. Weekly charts also show trading ranges. 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. 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 through this weekend and drier conditions next week.
Chart Trends: Trends in New York are mixed. Support is at 1380, 1350, and 1320 March, and resistance is at 1450, 1470, and 1490 March. Trends in London are mixed. Support is at 366.00, 359.00, and 354.00 December, and resistance is at 377.00, 380.00, and 384.00 December.

COCOA
General Comments: Futures closed lower again yesterday and might be making a short-term top. The market appears ready for a small correction at this time. The trends are still mostly up in New York and in London on both the daily and weekly charts. 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: A few 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 4.181 million bags.
Chart Trends: Trends in New York are mixed to up with objectives of 2220, 2280, and 2370 December. Support is at 2070, 2030, and 2000 December, with resistance at 2130, 2160, and 2210 December. Trends in London are mixed. Support is at 1530, 1520, and 1480 December, with resistance at 1600, 1610, and 1630 December.
Questions? Ask Jack Scoville today at 312-264-4322

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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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