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Morning Softs Report 01/31/18


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COTTON
General Comments: Cotton was lower once again on follow through selling. The selling seemed to be mostly long liquidation. The weekly charts suggest that a bigger correction might be coming as futures could work lower in the short-term to find new demand. If so, the downside could be limited if the US Dollar keeps working lower. However, the charts suggest that prices could move to 7500 March before finding significant new buying. Current buying has been reflecting the fact that merchants need to buy futures to cover on call positions. The weekly On Call report issued last week showed that more Cotton needs to be bought in the futures market. The production report showed that there is plenty of Cotton here, but getting it out of producers hands has been difficult and prices have been much higher than most commercials had expected. Commercials are being forced now to buy Cotton at higher levels to cover the big on call position of unpriced Cotton that they have contracted for.
Overnight News: The Delta and the Southeast will get precipitation on Thursday and again this weekend. Temperatures should be on both sides of normal. Texas will see mostly dry conditions. Temperatures will be on both sides of normal. The USDA average price is now 74.52 ct/lb. ICE said that certified stocks are now 66,341 ba1es, from 63,142 bales yesterday.
Chart Trends: Trends in Cotton are down with objectives of 7500 March. Support is at 7700, 7670, and 7590 March, with resistance of 7800, 7870, and 7940 March.

FCOJ
General Comments: FCOJ was lower on what appeared to be long liquidation selling from producers. It is turning cold again in the US, and there are some fears that the cold weather could damage crops. The forecasts are mixed in this regard as the intensity of the cold snap is still highly variable in the weather forecasting models. There has apparently been some minor damge  from the freeze episodes earlier in the month The cold weather seen early in the month probably improved fruit quality for the majority of the production. The current weather is good as temperatures are warm and there is little rain around, but the crop is small. The harvest is progressing well and fruit is being delivered to processors and the fresh fruit packers. The Valencia harvest is well underway and the early to mid harvest is winding down. Florida producers are actively harvesting. Some early flowering has been reported in the groves. Processors mostly getting field run fruit.
Overnight News: Florida should get mostly dry weather and variable temperatures. Brazil should get scattered showers and near to below normal temperatures.
Chart Trends: Trends in FCOJ are mixed. Support is at 144.00, 141.00, and 140.00 March, with resistance at 149.00, 150.00, and 153.00 March.

DJ Florida FCOJ Movement And Pack – Jan 30
In mm ps, (million pounds solid). Source: Florida Department of Citrus (FDOC)
WEEK ENDING: 1/20/2018
Corresponding
Current Week Last
Week Season
1/20/2018 1/21/2017 % Change
CARRY OVER, RECEIPT & PACK
Carry Over
Bulk 185.31 187.07 -0.9%
Retail/Institutional 7.53 6.81 10.5%
Total 192.84 193.88 -0.5%
Pack
Bulk 5.86 4.97 18.1%
Retail/Institutional 0.73 1.19 -38.8%
Total Pack 6.59 6.15 7.1%
Reprocessed -3.22 -2.95 9.1%
Pack from Fruit 3.38 3.21 5.3%
Receipts & Losses
Net Gain or Loss 0.09 -0.20 -57.2%
Imports – Foreign 1.77 2.43 -27.2%
Domestic Receipts 0.30 0.52 -42.5%
Receipts of Florida Product
from Non-Reporting Entity – – NC
Chilled OJ used in FCOJ – 0.19 -100.0%
Reprocessed FCTJ 0.24 0.00 13233.2%
Total Carry Over, Receipt & Pack
Bulk 190.36 192.03 -0.9%
Retail/Institutional 8.25 8.00 3.2%
Total 198.61 200.03 -0.7%
MOVEMENT
Bulk
Domestic 4.14 5.29 -21.8%
Exports 0.73 0.64 13.9%
Total (Bulk) 4.86 5.93 -18.0%
Retail/Institutional
Domestic 1.18 1.04 12.8%
Exports – – NC
Total (Retail/Inst) 1.18 1.04 12.8%
Total Movement 6.04 6.97 -13.4%
ENDING INVENTORY
Bulk 185.49 186.10 -0.3%
Retail/Institutional 7.08 6.96 1.7%
Ending Inventory 192.57 193.06 -0.3%
Total Same
Total Season Period Last
To Date Season
20-Jan-18 21-Jan-17 % Change
CARRY OVER, RECEIPT & PACK
Carry Over
Bulk 185.02 212.24 -12.8%
Retail/Institutional 7.20 6.78 6.1%
Total 192.21 219.03 -12.2%
Pack
Bulk 41.12 63.14 -34.9%
Retail/Institutional 20.52 23.57 -12.9%
Total Pack 61.64 86.71 -28.9%
Reprocessed -38.92 -57.84 -32.7%
Pack from Fruit 22.72 28.87 -21.3%
Receipts & Losses
Net Gain or Loss 0.79 -2.14 -62.9%
Imports – Foreign 66.61 58.74 13.4%
Domestic Receipts 2.68 1.26 111.8%
Receipts of Florida Product 0.03 0.67 -96.1%
from Non-Reporting Entity 0.13 0.28 -53.2%
Chilled OJ used in FCOJ 0.24 0.34 -28.8%
Reprocessed FCTJ
Total Carry Over, Receipt & Pack
Bulk 257.70 276.70 -6.9%
Retail/Institutional 27.72 30.35 -8.7%
Total 285.41 307.05 -7.0%
MOVEMENT
Bulk 68.33 73.44 -7.0%
Domestic 3.88 17.15 -77.4%
Exports 72.21 90.60 -20.3%
Total (Bulk)
Retail/Institutional
Domestic 20.64 23.40 -11.8%
Exports – – NC
Total (Retail/Inst) 20.64 23.40 -11.8%
Total Movement 92.85 113.99 -18.6%
ENDING INVENTORY
Bulk 185.49 186.10 -0.3%
Retail/Institutional 7.08 6.96 1.7%
Ending Inventory 192.57 193.06 -0.3%

COFFEE
General Comments: Futures were lower on speculative trading tied to the strength in the US Dollar, this time against the Brazilian Real. The charts present a sideways appearance for now and speculators remain very short and might want to reduce part of those positions. They were good sellers yesterday as most maintain a bearish vie won the market overall. New York traders are noting the good weather currently being reported in Brazil and expect another bumper crop. Traders are also noting very good production in Vietnam this year. However, ideas of huge crops might now be part of the futures price and might not really be there as the weather in Brazil and other parts of Latin America has not been perfect. The reality is that some areas remain too dry while others have seen excessive rains. Producers there do thing an adequate to good crop is possible, though, as rains in general have been timely. Reports from Vietnam have suggested that producers there are willing to wait through Tet for better prices before selling much. The situation seems little changed in Latin America. Differentials in Central America are weak.
Overnight News: Certified stocks are lower today and are about 1.965 million bags. The ICO composite price is now 114.78 ct/lb. Brazil will get drier weather. Temperatures should be near to below normal. Colombia should get isolated showers. Central America and southern Mexico should get isolated showers or dry conditions. Vietnam will get mostly dry weather, but some storms are possible in the far south. Temperatures should average near to above normal.
Chart Trends: Trends in New York are mixed. Support is at 120.00, 118.00, and 113.00 March, and resistance is at 124.00, 126.00 and 128.00 March. Trends in London are mixed to down with objectives of 1700 and 1650 March. Support is at 1730, 1700, and 1670 March, and resistance is at 1750, 1770, and 1780 March.

SUGAR
General Comments: Futures were higher once again yesterday and trends are up at least for the short-term. The overall feel of the market is that prices for now are cheap enough, but both New York and London appear to need a catalyst to work higher in a big way. Speculators are short and a short-term short covering rally is possible now. Ideas that Sugar supplies available to the market can increase in the short-term have been key to the selling. Mills in Brazil have decided to make more Ethanol as world Crude Oil and products prices have been very strong. Ideas are that these prices can continue strong as OPEC and Russia have agreed to keep production constrained compared to world demand. Even so, there are ideas that world Sugar supplies are still more than enough to meet any potential demand scenario. India reports that it has a big crop and might export 1.0 million tons this year. The government is working on ways to make this happen.
Overnight News: Brazil should feature drier weather. Temperatures should be near to below normal
Chart Trends: Trends in New York are up with objectives of 1390 and 1440 March. Support is at 1350, 1320, and 1300 March, and resistance is at 1370, 1390, and 1410 March. Trends in London are mixed to up with objectives of 366.00 and 374.00 March. Support is at 358.00, 353.00, and 351.00 March, and resistance is at 365.00, 367.00, and 371.00 March.

DJ Pakistan to Expand Sugar-Export Subsidy Program — Market Talk
0315 GMT – Pakistan is continuing to subsidize sugar exports as it tries to reduce large supplies, quadrupling the volume of product eligible for export breaks to 2 million tons, the USDA says. The possibility of increased imports won’t help sugar prices, which have been under pressure to start 2018. Exports were about 400,000 tons in the year through September. (lucy.craymer@wsj.com)

COCOA
General Comments: Futures were higher, but held the recent trading range. Traders are waiting for more news on the size of the crop, but this news might have to wait a while.. The market is waiting for the Harmattan winds that can suck moisture from the soil and trees and really hurt bean quality and production. These winds have not developed as of yet, but could at any time. It has become hot and dry in many parts of West Africa, so conditions are good for the winds to form. Some crop losses might be possible if the current conditions persist even without the winds. Ivory Coast said yesterday it will need to cut some trees that have been diseased and replace them over a three-year period. About 150,000 hectares of Cocoa trees could be affected per year. Ivory Coast said it sold Cotton that had been at risk of default. The gut slot for offers from the main crop is passing, and the sales by the government suggest that offers down the road can be less. Cocoa prices can hold in a sideways or up pattern until the mid crop is better defined and starts to move to the market.
Overnight News: Mostly dry conditions are expected in West Africa. Temperatures will average above normal. Malaysia and Indonesia should see frequent showers. Temperatures should average above normal. Brazil will get cry conditions and near to above normal temperatures. ICE certified stocks are higher today at 4.004 million bags.
Chart Trends: Trends in New York are mixed. Support is at 1930, 1900, and 1870 March, with resistance at 2010, 2030, and 2070 March. Trends in London are mixed. Support is at 1350, 1330, and 1320 March, with resistance at 1390, 1440, and 1450 March.
Questions? Ask Jack Scoville today at 312-264-4322

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The information and data in this report were obtained from sources considered reliable. Their accuracy or completeness is not guaranteed and the giving of the same is not to be deemed as an offer or solicitation on our part with respect to the sale or purchase of any securities or futures. The Price Futures Group, its officers, directors, employees, and brokers may in the normal course of business have positions, which may or may not agree with the opinions expressed in this report. Any decision to purchase or sell as a result of the opinions expressed in this report will be the full responsibility of the person authorizing such transaction. Reproduction and/or distribution of any portion of this report are strictly prohibited without the written permission of the author. Trading in futures contracts, options on futures contracts, and forward contracts is not suitable for all investors and involves substantial risks. ©2018



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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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