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Softs Report 03/29/19


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COTTON
General Comments Cotton was lower on selling that developed before the release of the USDA reports today. It was a correction day and the selling seemed to be mostly long liquidation from speculators and perhaps some industry. The selling came despite a strong weekly export sales report released by USDA. The planting intentions report might not show much as the bulk of the bad weather in planting areas has been seen since the survey was taken. Everyone is waiting for the resolution of the US-China trade dispute, and the US government is indicating that a deal is going to be more difficult to achieve by the end of the month. The market anticipates that a deal is done in April. Both sides are negotiating the final points. The US weather continues to feature a lot of rain in the south, and fieldwork and initial planting in far southern areas is mostly delayed. Drier weather is forecast for this week, and there are hopes that at least some initial fieldwork can get done.
Overnight News: The Delta and Southeast should get mostly dry weather this week and rains this weekend and dry weather next week. Temperatures should be mostly above normal this week, then cooler. Texas will have dry weather. Temperatures will be above normal today, then trend to below normal. The USDA average price is now 70.33 ct/lb. ICE said that certified stocks are now 46,544 bales, from 46,544 bales yesterday.
Chart Trends: Trends in Cotton are mixed to up with objectives of 7800 and 8210 May. Support is at 7520, 7490, and 7380 May, with resistance of 7740, 7800, and 7850 May.

DJ On-Call Cotton – Mar 28
As of Mar 22. On-call positions represent spot cotton sold to or
purchased from a merchant, based on New York cotton futures contracts
of 500-pound bales. Prices are not yet fixed against these contracts.
Source: CFTC
*-denotes changes from the previous week are based on revised data from
last week.
Call Previous Change Call Previous Change
Sales Purchases
May 19 22,227 22,065 162 9,741 12,045 -2,304
Jul 19 31,864 29,211 2,653 4,560 4,523 37
Dec 19 25,863 25,131 732 28,501 26,346 2,155
Mar 20 11,377 10,483 894 1,472 1,252 220
May 20 4,261 3,913 348 197 197 0
Jul 20 4,660 4,418 242 18 18 0
Dec 20 5,309 5,155 154 6,799 6,116 683
Mar 21 815 749 66 300 300 0
Total 106,376 101,125 5,251 51,588 50,806 791
Open Change
Int
May 19 102,799 107,316 -4,517
Jul 19 52,751 47,789 4,962
Oct 19 7 9 -2
Dec 19 58,791 55,690 3,101
Mar 20 8,173 7,920 253
May 20 445 450 -5
Jul 20 221 179 42
Dec 20 1,842 1,658 184
Mar 21 7 0 7
Total 225,036 221,011 4,025

FCOJ
General Comments FCOJ was a little higher in consolidation trading. Trends are mostly down and the market is once again testing support at the contract lows. These lows could hold as futures fight to establish a trend for the longer term. Ideas continue that production remains strong and demand does not and are backed up by the weekly Florida Movement and Pack report that shows that inventories inside the state are significantly higher than a year ago. The Oranges harvest remains active in Florida as the weather is mostly dry. Producers are concentrating on harvesting Valencia now. Irrigation is being used in all areas. Flowering for the next crop is seen everywhere and some small fruit is forming. Mostly good conditions are reported in Brazil, and some beneficial rains should be seen this week.
Overnight News: Florida should get mostly dry weather. Temperatures will average near normal. Brazil should get scattered showers and above normal temperatures.
Chart Trends: Trends in FCOJ are mixed to down with objectives of 117.00 May. Support is at 120.00, 117.00, and 116.00 May, with resistance at 125.00, 128.00, and 131.00 May.

COFFEE
General Comments Futures were little changed in New York and a little lower in London. The trade is still worried about big supplies, especially from Brazil and low demand. Bad US economic data increased fears of a worldwide economic slowdown tat could hurt overall demand.. The ICO has forecast a surplus year again this year, and inventory data from ICO and others shows ample supplies. Brazil had a big production year for the current crop, but the next crop should be less as it is the off-year for production. Ideas are that the current production of 62 or 63 or more million bags can become about 52 million bags next year. El Nino is fading, but remains in the forecast, and Coffee areas in Brazil could be affected by drought that could hurt production even more. Mostly dry conditions are in the forecast for this week. Vietnam is active in its harvest, but producers are not willing to sell at current prices. Production in Vietnam is estimated less than 30 million bags due to uneven weather during the growing season. It is still dry, and production potential for the next crop is getting hurt.
Overnight News: ICE certified stocks are lower today at 2.492 million bags. The ICO daily average price is now 96.46 ct/lb. Brazil will get mostly dry conditions with below normal temperatures today and above normal temperatures this weekend. Vietnam will see some showers in central and northern areas today and tomorrow.
Chart Trends: Trends in New York are mixed to down with objectives of 93.00 and 89.00 May. Support is at 93.00, 91.00, and 85.00 May, and resistance is at 98.00, 100.00 and 101.00 May. Trends in London are mixed. Support is at 1490, 1480, and 1450 May, and resistance is at 1520, 1540, and 1550 May.

SUGAR
General Comments: Futures closed lower again yesterday on follow through selling. London was once again the weaker market. The weakness in White Sugar futures should help promote additional weakness in Raw Sugar futures, implying that New York will soon turn trends down. Chart patterns are down in London. The fundamentals still suggest big supplies, and the weather in Brazil has improved to support big production ideas. There have been production estimates for the 2019-20 season near 29.5 million tons, The weather earlier in the yer hurt yield potential and some estimates are lower than at the start of the season. However, the estimates point to bigger crops this year than last year. Brazil weather is improving in all areas as there is less rain in southern areas and more to the north. It has turned drier again in northern areas, and there is some concern that the dry season might be starting early. Brazil has been using a larger part of its Sugarcane harvest to produce ethanol this year instead of Sugar, but Thailand has shown increased production this year. Ideas that production in India and Pakistan is being hurt by news that Indian mills are asking the government not to force them to sell Sugar into a depressed world market in order to try to maintain some control over operating losses. Very good conditions are reported in Thailand.
Overnight News: Brazil will get mostly dry weather. Temperatures should be near normal.
Chart Trends: Trends in New York are mixed. Support is at 1240, 1220, and 1210 May, and resistance is at 1280, 1300, and 1340 May. Trends in London are down with objectives of 320.00 May. Support is at 326.00, 323.00, and 319.00 May, and resistance is at 330.00, 334.00, and 336.00 May.

COCOA
General Comments: Futures closed a little higher in New York and higher in London. The daily charts show that trends are turning up again, with London in the lead. Some of the strength in London is due to currency considerations, but the market is needing to find some Cocoa to meet some demand and futures have been stronger than expected overall. The Brazil harvest seems to be winding down. Chart patterns remain weak, and weekly chart trends are down in both markets. The main crop harvest should be about over and mid crop harvest is still a month or more away. The main crop harvest is active in West Africa, and Ivory Coast arrivals are strong. However, arrivals have started to fade. The weekly pace just a month or two ago was about 15% ahead of a year ago and now is under 10% of a year ago. East Africa is turning a little too dry. Generally god conditions are reported Indonesia.
Overnight News: Scattered showers are expected in West Africa. Temperatures will average near to 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 higher today at 4.217 million bags.
Chart Trends: Trends in New York are mixed. Support is at 2220, 2200, and 2150 May, with resistance at 2280, 2330, and 2370 May. Trends in London are mixed. Support is at 1680, 1650, and 1630 Mary, with resistance at 1720, 1730, and 1750 May.



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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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