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Morning Softs Report 05/16/18


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COTTON
General Comments: Cotton was mixed yesterday in quiet trading. Much of the Southeast and parts of the Delta will see big rains. Futures tested previous highs on the weekly charts near 8800 last week and are coming away from that level. Further weakness now could mean that the market has made an important top. It is still a weather market due to the poor weather in Texas and on there are still ideas of tight available supplies. There are ideas that the US is now running short of high quality Cotton to deliver to the exchange and to overseas buyers. Demand remains strong in export markets as the weekly export sales report showed strong volumes last week. USDA showed good planting progress in its reports last week. New crop planting has been slow, but not unusually slow when compared to last year and the five-year average. It is now ahead of the five-year average.
Overnight News: The Delta and the Southeast will get big rains, mostly in the southeast, this week. Temperatures should be mostly below normal. Texas will see mostly dry conditions, but some showers are possible today. Temperatures will be above normal. The USDA average price is now 79.69 ct/lb. ICE said that certified stocks are now 79,220 bales, from 78,173 bales yesterday. ICE said that there were 0 contracts tendered for delivery today and that total deliveries are now 214 contracts.
Chart Trends: Trends in Cotton are mixed. Support is at 8350, 8330, and 8290 July, with resistance of 8500, 8600, and 8700 July.

FCOJ
General Comments: FCOJ was lower. FCOJ is in a weather market as dry conditions are reported in Florida and in production areas of Brazil. However, some drought busting rains are now being reported in Florida/ The harvest is starting to wind down in some areas of Florida. The market is still dealing with a short crop against weak demand. The current weather is good as temperatures are warm and it is raining Florida producers are seeing marble sized to golf ball sized fruit. Conditions are reported as generally good. Irrigation is being used. Brazil also could use more rain as Sao Paulo has been hot and dry. Generally good conditions are reported in Europe and northern Africa.
Overnight News: Florida should get showers and storms his weekend. Temperatures will average near to below normal. Brazil should get mostly dry weather and near to above normal temperatures. The best precipitation should be this weekend. There have been no deliveries so far in New York against May contracts.
Chart Trends: Trends in FCOJ are up with objectives of 171.00 and 177.00 July. Support is at 167.00, 165.00, and 162.00 July, with resistance at 173.00, 176.00, and 179.00 July.

COFFEE
General Comments Futures in New York were lower in anticipation of the Brazil harvest that is about to get started and both markets felt selling pressure from a stronger US Dollar. Ideas are that about 55 million bags of Coffee will be harvested. The weather is dry in Arabica areas, but there have been some showers in Conillon areas. London was lower as well, but most of the weakness was in New York. Origin is still offering in Central America and is still finding weak differentials. Good business is getting done and exports are active. Traders anticipate big crops from Brazil and from Vietnam this year and have remained short in the market. Robusta remains the stronger market as Vietnamese producers and merchants are not willing to sell at current prices and are willing to wait for a rally. Vietnamese cash prices were lower last week with good supplies noted in the domestic market. Current rains are favorable for the crops.
Overnight News: Certified stocks are lower today and are about 1.995 million bags.6.732 million bags, from 6.567 million last month. The ICO composite price is now 110.61 ct/lb. Brazil will get drier conditions until showers appear on Saturday. Temperatures should be near to above normal. Colombia should get isolated showers. Central America and southern Mexico should get isolated showers or dry conditions. Vietnam will get showers. ICE said that there was 1 delivery today in New York and that total deliveries for the month are 252 contracts.
Chart Trends: Trends in New York are mixed to down with objectives of 115.00 and 111.00 July. Support is at 117.00, 115.00, and 112.00 July, and resistance is at 121.00, 124.00 and 126.00 July. Trends in London are mixed. Support is at 1720, 1700, and 1670 July, and resistance is at 1780, 1810, and 1840 July.

SUGAR
General Comments: Futures were higher and traders are trying to turn short-term trends up. The fundamentals still suggest that lower prices are still coming as analysts remain focused on big world production. There is still big supplies available to the market. Plenty of Sugar will most likely be around, and many analysts support that idea by calling for big production surpluses for this and next year. Reports in the first part of last week that the Brazil season was off to a big start caused the last round of selling interest, and ideas that the market was oversold has caused the recent recovery. It has turned dry in parts of Brazil, including some Sugarcane production areas, and there is some talk of losses to the crop in the near future unless rains return soon. India is back to export Sugar this year after being a net importer for the last couple of years. The government is subsidizing industry and producers to help maintain an active market flow and to prevent the buildup of Sugar in storage. Thailand has produced a record crop and is selling. Brazil still has plenty of Sugar to sell, and the EU has had over production in the past year. Middle East and North African buyers are reported to be buying normal or less than normal amounts of Sugar in the world market right now.
Overnight News: Brazil will get dry weather, but a few showers are possible on Saturday. Temperatures should be near to above normal.
Chart Trends: Trends in New York are mixed to down with objectives of 1070 and 1010 July. Support is at 1100, 1080, and 1050 July, and resistance is at 1160, 1190, and 1200 July. Trends in London are mixed. Support is at 318.00, 316.00, and 311.00 August, and resistance is at 328.00, 332.00, and 336.00 August.

COCOA
General Comments Futures were lower and short-term trends are turning down. Both New York and London could be forming a top now. Ideas that world production has been largely sold remain part of the rally. Showers and more seasonal temperatures have been seen in the last few weeks to improve overall production conditions in West Africa. The mid crop harvest is starting, and wire reports indicate that some initial mid crop harvest is underway in all countries. Yield estimates imply that variable yields can be expected. The harvest should begin soon in Ivory Coast and Ghana.
Overnight News: Scattered showers are expected in West Africa. Temperatures will average near to 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 lower today at 5.259 million bags. ICE said that 0 delivery notices were posted against May contracts and that total deliveries for the month are now 222 contracts.
Chart Trends: Trends in New York are mixed. Support is at 2770, 2730, and 2700 July, with resistance at 2860, 2900, and 2920 July. Trends in London are mixed. Support is at 1890, 1850, and 1810 July, with resistance at 1970, 2000, and 2030 July.



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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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