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Softs Report 11/08/18


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COTTON
General Comments Cotton was higher yesterday and recovered from the big losses of Tuesday as the market held on a test of recent lows. Speculators were the best buyers. Lower crop condition ratings seen Monday night and ideas that USDA should reduce production estimates later today provided fundamental support. The market is now waiting for the new USDA production and supply and demand estimates from USDA and is wondering about production losses in the Carolinas from Hurricane Florence and especially production losses in Georgia from Hurricane Michael. The Georgia hurricane had the potential to be devastating as the most powerful part of the storm passed directly over the more important production areas in the state. Georgia is the second largest producer of Cotton in the US, so losses there would be important to the final estimate. Texas is far and away the largest producer of Cotton in the US, but it had some extreme weather of its own during the Summer growing season and should have less production as well. USDA estimates have been held high even with the weather and extremely variable growing conditions, so it will be an important report for the supply side of the market. The market needs new demand. Export sales for the last few weeks have been poor and show no real signs of improvement for now. Export demand needs to improve soon for prices to rally significantly this year, but any increase in demand has to come with no purchases from China for a while.
Overnight News: The Delta should get mostly dry weather and cool temperatures. Some light rain is possible today and tomorrow. The Southeast will get dry weather except for rains today and tomorrow. Temperatures should trend to near to below normal. Texas will have mostly dry weather. Temperatures will be variable. The USDA average price is now 75.17 ct/lb. ICE said that certified stocks are now 41,554 bales, from 39,090 bales yesterday. USDA said that net Upland Cotton export sales were 91,000 bales this year and 15,500 bales next year. Net Pima sales were 6,200 bales this year and 0 bales next year.
Chart Trends: Trends in Cotton are mixed. Support is at 7830, 7780, and 7740 December, with resistance of 7980, 8010, and 8030 December.

Wire: Bloomberg News (BN) Date: Nov 5 2018 13:40:00
Cotton Production, Inventory Survey Before USDA WASDE Report
By Dominic Carey
(Bloomberg) — The following table shows results of a Bloomberg News survey
of as many as eight analysts for the USDA’s World Agricultural Supply and Demand
report on the 2018-19 cotton crop, which is scheduled for release at noon in
Washington on Nov. 8. Figures are in millions of bales.
================================================================
|——–Survey Results———|USDA
2018-19:| Avg | Low | High | Oct.
================================================================
US Production | 19.21| 18.65| 19.75| 19.76
US Exports | 15.25| 14.80| 15.50| 15.50
US End Stocks | 4.62| 4.15| 5.10| 5.00
World Production | 120.82| 120.00| 121.50| 121.66
World Consumption | 127.45| 127.00| 128.00| 127.76
World End Stocks | 74.16| 72.85| 75.00| 74.45
================================================================================
Analyst |————U.S.————| World
| | | End
Estimates: |Production |Exports |Stocks |Production |Consumption |Stocks
================================================================================
Cottonexperts.com | 19.46| 15.00| 5.10| 120.66| 127.00| 74.00
Doane | 19.00| 15.50| 4.15| 121.00| 128.00| 74.00
Love Consulting | 19.20| 15.50| 4.60| 121.30| 128.00| 74.50
Price Futures Group| 19.55| 15.50| 4.75|n/a |n/a |n/a
Rabobank | 19.30| 15.20| 4.84| 121.00| 127.40| 74.20
Rose Commoditiy | | | | | |
Group | 18.75| 15.00| 4.20| 120.25| 127.25| 74.55
Varner Bros. | 18.65| 14.80| 4.59| 120.00| 127.00| 72.85
Wedbush Securities | 19.75| 15.50| 4.70| 121.50| 127.50| 75.00
—————————–====================——————————
Copyright (c) 2018, Bloomberg, L. P.
################################ END OF STORY 1 ##############################

FCOJ
General Comments: FCOJ was higher yesterday as the weather is good for harvesting. The market is holding a support area on the charts, and this created a little speculative buying. The Oranges harvest is active in Florida under good weather conditions. Chart trends are sideways.. Overall growing conditions in Florida are good to very good, and there is no storm development in the Atlantic at this time. Florida producers are seeing small-sized to good-sized fruit, and work in groves maintenance is active. Irrigation is being used in all areas. Packing houses are open to process fruit for the fresh market, and a couple of major processors are open in the state to take packing house eliminations.
Overnight News: Florida should get mostly dry conditions or light showers. Temperatures will average near to above normal. Brazil should get scattered showers and near to above normal temperatures. ICE said that 0 contracts were delivered against November futures and that total deliveries for the month are now 352 contracts.
Chart Trends: Trends in FCOJ are mixed. Support is at 136.00, 133.00, and 130.00 January, with resistance at 139.00, 141.00, and 143.00 January.

COFFEE
General Comments: Futures were higher in both markets again yesterday as the US Dollar moved lower in reaction to the US elections yesterday. Currency relationships, and especially the rate between the US Dollar and the Brazilian Real, continue to be the driving force in Coffee trading. The Brazil crops are getting harvested now, but are not always finding their way to the market due to the Real strength against the Dollar. Producers are also looking ahead to next year. El Nino remains in the forecast and Coffee areas in Brazil could be affected by drought. This is the off-year for production there, anyway, and a drought would mean even less production. Vietnam is getting close to its next harvest. Production in Vietnam is estimated at or above 30 million bags. Producers in both countries are not selling much. Some problems with too much rain have been noted in Central America. Drier conditions are wanted for harvesting, and mostly dry weather is in the forecast as the calendar turns to November.
Overnight News: Certified stocks are a little higher today and are about 2.446 million bags. The ICO composite price is now 112.45 ct/lb. Brazil will get showers today, then drier weather. Temperatures should be near to below normal. Colombia should get isolated showers. Central America and southern Mexico should get showers or dry conditions. Vietnam will get showers.
Chart Trends: Trends in New York are mixed. Support is at 113.00, 111.00, and 109.00 December, and resistance is at 117.00, 119.00 and 121.00 December. Trends in London are mixed to down with objectives of 1640 January. Support is at 1660, 1650, and 1620 January, and resistance is at 1710, 1730, and 1740 January.

SUGAR
General Comments: New York and London both closed mostly a little higher. A weaker US Dollar created some fund buying interest. The downside potential of the market should be limited on ideas that world production is in fact dropping and might be less than though just a few weeks ago. Production losses are expected in India due to hot and dry weather earlier in the growing season and some recent reports of pest attacks. Dry conditions continue in the EU, and Russia, but conditions are mostly good in Ukraine. Very good conditions are reported in Thailand. Brazil producers are worried about Cane production, and the market still talks about less production there this year. It was dry earlier, but most areas have had enough or too much rain now. The wet areas are mostly in the center-south region. The dry weather in much of Europe and in southern Russia near the Black Sea has hurt Sugar beets production potential in these areas.
Overnight News: Brazil will get showers today, then drier weather. Temperatures should be near to above normal.
Chart Trends: Trends in New York are mixed to down with objectives of 1300 and 1230 March. Support is at 1300, 1270, and 1260 March, and resistance is at 1350, 1370, and 1400 March. Trends in London are mixed to down with no objectives. Support is at 345.00, 338.00, and 336.00 March, and resistance is at 355.00, 364.00, and 367.00 March.

COCOA
General Comments Futures closed higher once again and made new highs for the move. The recovery has been impressive as it is time for offers from the West Africa harvest to start increasing. However, Ivory Coast is forced by the World Bank to sell Cocoa throughout the year in an effort to manage risk and that means less Cocoa is available to buy at the harvest time. The outlook for strong production in the coming year is still around, but there are some disease concerns for West Africa as a lot of humid air has promoted some concerns that Black Pod Disease could spread. In fact, initial harvest reports from Nigeria indicate reduced yields due to too much rain as the main crop was maturing. However, weather in the region is drier now and any production losses should be limited. The main crop harvest is in its earliest stages in some parts of West Africa. Main crop production ideas for Ivory Coast and Ghana are being reduced, with Ivory Coast now estimating its main crop production at 1.985 million tons, down from previous estimates just over 2.0 million tons. Conditions appear good in East Africa and Asia. Demand is said to be improving as offers from the new harvest start to increase.
Overnight News: Mostly dry conditions are expected in West Africa. Temperatures will average mostly above normal. Malaysia and Indonesia should see showers. Temperatures should average above normal. Brazil will get mostly dry conditions and near to above normal temperatures. ICE certified stocks are lower today at 3.721 million bags.
Chart Trends: Trends in New York are up with objectives of 2430 and 2500 December. Support is at 2330, 2290, and 2270 December, with resistance at 2400, 2420, and 2430 December. Trends in London are mixed to up with objectives of 1720, 1740, and 1810 December. Support is at 1670, 1640, and 1610 December, with resistance at 1720, 1730, and 1750 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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