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Morning Softs Report 11/16/17


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COTTON
General Comments: Cotton was a little higher yesterday in consolidation trading. There did not appear to be any fundamental issues or news to push prices higher or lower, so the market held the range. The futures market is watching the harvest roll along and is debating the demand for US and world Cotton. Some traders say that USDA is seriously underestimating demand for the fiber, while the others look to the high USDA ending stocks estimates. Futures had a muted reaction to the USDA reports last week and held to the range seen for the last few weeks. Chart patterns imply that the market is content to hold at current levels. Farmers are reported to be quiet sellers right now. Harvest conditions are good in just about all areas.
Overnight News: The Delta and the Southeast should get mostly dry weather this week and light showers this weekend. Temperatures should be near to above normal through Saturday, then near to below normal. Texas will see mostly dry conditions. Temperatures will be mostly above normal. The USDA average price is now 67.33 ct/lb. ICE said that certified stocks are now 47,970 bales, from 48,128 bales yesterday. USDA said that net Upland Cotton export sales were 506,700 bales this year and 200 bales next year. Net Pima sales were 18,100 bales this year and 0 bales next year.
Chart Trends: Trends in Cotton are mixed. Support is at 6800, 6780, and 6690 December, with resistance of 6950, 6970, and 7000 December.

FCOJ
General Comments: FCOJ closed a little higher in consolidation trading. The market is starting to turn trends up again. Production is now about two-thirds of what was expected at the start of the growing season. The demand side remains weak. However, for now it looks like the supply side has taken over as the force in the markets, although the supply side bullish fundamental might have lost its force yesterday.. Brazil weather has improved as groves are now getting rains, but suffered from drought at flowering time. It was also very hot and it is possible that production from Sao Paulo state will be less. Temperatures have moderated in Sao Paulo and there has been better rain, but there is some talk that hot and dry and stressful conditions ould return in the near future.
Overnight News: Florida should get mostly dry weather and near to above normal temperatures. Scattered showers are expected this weekend. Brazil should get mostly dry conditions and near to above normal temperatures. Some showers are possible this weekend. ICE said that 0 notices were posted for delivery today and that total deliveries for the month are now 0 contracts.
Chart Trends: Trends in FCOJ are mixed to up with objectives of 171.00 January. Support is at 157.00, 155.00, and 152.00 January, with resistance at 163.00, 165.00, and 166.00 January.

COFFEE
General Comments: New York closed lower again in consolidation trading. London closed higher on some talk that a squeeze in the Robusta market is coming. Robusta production was short last year and there are reports of limited offers and high prices in Vietnam again this year. Many Arabica traders are expecting the market to move higher due to ideas of smaller crops from all over Latin America, and especially Brazil. Brazil production is now expected to be less than 60 million bags, and could be much less than 60 million bags depending on future weather developments. Brazil exports are reduced on what is called reduced inventories held by exporters and producers. Producers are less interested in selling as well as the market tries to gauge production potential in Brazil after earlier drought and cold weather hurt trees at and before flowering time. There is plenty of rain now, but dry weather could return soon and stress the trees again There are also reports of short crops in parts of Central America and some areas in South America due to the lack of farmer investment from the low prices. New York futures could be forming a bottom at this time. Ideas are that the funds and industry need to buy in New York, but Arabica demand is tepid and differentials bids remain weak. Europe is paying better than the US, but differentials overall are not strong.
Overnight News: Certified stocks are lower today and are about 1.908 million bags. GCA stocks are now 7.035 million bags, from 7.189 million last year. The ICO composite price is now 118.38 ct/lb. Brazil will get drier weather through Saturday and showers and storms on Sunday and Monday. Temperatures should average near to above normal today and tomorrow, then near to below normal. Colombia should get scattered to isolated showers. Central America and southern Mexico should get scattered showers or dry conditions. Temperatures should average near to above normal.
Chart Trends: Trends in New York are mixed. Support is at 125.00, 122.00, and 121.00 December, and resistance is at 129.00, 130.00 and 133.00 December. Trends in London are mixed to up with objectives of 1860 and 1890 January. Support is at 1820, 1800, and 1770 January, and resistance is at 1850, 1880, and 1900 January.

SUGAR
General Comments: Futures were mixed in New York, with nearby months a little lower and deferred months a little higher. It was a consolidation day and the market is still holding uptrends. London was lower, with the most weakness seen in the expiring December contract. Brazil features reduced sugarcane crush and continued emphasis on ethanol production and reduced Sugar production as it moves to cover domestic demand at the expense of exports. Trends are turning up in London and in New York after the price action last week on ideas of reduced availability of Sugar to the market. There have been no big demand reports, and the lack of demand against ideas of big world production are keeping the market in a fundamentally bearish mode. Even so, the charts in both New York and London imply that higher prices are coming.
Overnight News: Brazil should feature drier weather through Saturday and showers and storms starting on Sunday. Temperatures should be near to above normal today and tomorrow, then near to below normal
Chart Trends: Trends in New York are mixed to up with objectives of 1530, 1560, and 1590 March. Support is at 1480, 1460, and 1430 March, and resistance is at 1520, 1530, and 1580 March. Trends in London are mixed to up with objectives of 394.00 and 406.00 March. Support is at 386.00, 383.00, and 380.00 March, and resistance is at 396.00, 399.00, and 405.00 March.

COCOA
General Comments: Futures closed lower in New York and in London on what appeared to be speculative selling. The charts show that a top has formed and that Cocoa futures could hit swing targets with further weakness in prices. Some talk of disease in crops in Ivory Coast has created much of the recent buying interest, but no news has been Heard to confirm the talk so the fundamental supply side issue faded. It has been unseasonably wet in parts of West Africa, so some diseases could be forming. Demand ideas are holding strong as processor margins have been great. World production ideas remain high.
Overnight News: A few isolated showers 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 scattered showers and near to above normal temperatures. ICE certified stocks are slightly higher today at 3.874 million bags. ICE said that 0 notices were posted for delivery today and that total deliveries for the month are now 0 contracts.
Chart Trends: Trends in New York are down with objectives of 2080 March. Support is at 2100, 2070, and 2060 March, with resistance at 2150, 2180, and 2220 March. Trends in London are down with objectives of 1890 March. Support is at 1600, 1580, and 1560 March, with resistance at 1630, 1650, and 1670 March.
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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