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Softs Report 06/07/19


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COTTON
General Comments: Cotton was a little lower yesterday in response to weaker US export sales. However, futures held afer some big early selling and closed with only slight losses. Traders were worried about demand from Mexico for US Cotton, but there were reports that Trump was considering delaying the tariffs and that Mexico was considering sending the National Guard to the southern border. Mexico and the US met yesterday to try to avoid a tariff war but no agreement was made by the two sides. US Cotton planting progress remains good. Cotton planting progress has been on par with the five-year average and ideas of big crops are keeping prices weaker. There are some concerns that the cold May weather from Texas to the East Coast might cause lower yields this Fall. Also pressuring the market are forecasts for big production around the world. USDA sees no shortage of Cotton anywhere in the coming year. However, it could be that the Indian monsoon gets off to a slow start and production potential gets hurt there and in Pakistan. It has been dry so far and is turning hotter, but this is considered pre monsoonal weather. Ideas are that the monsoon will get started in the next few days. It has also been hot and dry in central Russia and Kazakhstan, but more moderate conditions are possible next week.
Overnight News: The Delta and Southeast should get scattered showers today and tomorrow, then drier weather. Temperatures should be mostly above normal. Texas will have mostly dry weather this weekend and scattered showers next week. Temperatures will average near to above normal. The USDA average price is now 63.52 ct/lb. ICE said that certified stocks are now 85,903 bales, from 81,462 bales yesterday.
Chart Trends: Trends in Cotton are mixed. Support is at 6740, 6690, and 6610 July, with resistance of 6990, 7150, and 7240 July.

DJ On-Call Cotton – Jun 6
As of May 31. 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
Jul 19 11,499 11,956 -457 5,535 6,569 -1,034
Oct 19 0 0 0 0 0 0
Dec 19 29,764 30,647 -883 38,916 39,350 -434
Mar 20 20,413 19,783 630 3,192 3,192 0
May 20 8,012 7,701 311 387 387 0
Jul 20 12,486 12,203 283 2,102 2,102 0
Dec 20 6,280 6,262 18 10,980 10,784 196
Mar 21 2,185 2,163 22 309 309 0
May 21 641 641 0 0 0 0
Jul 21 394 394 0 0 0 0
Dec 21 331 331 0 22 22 0
Total 92,005 92,081 -76 61,443 62,715 -1,272
Open Change
Int
Jul 19 93,449 98,466 -5,017
Oct 19 49 49 0
Dec 19 93,661 89,263 4,398
Mar 20 15,856 14,595 1,261
May 20 2,005 1,585 420
Jul 20 3,502 3,274 228
Dec 20 7,940 7,581 359
Mar 21 111 111 0
May 21 0 0 0
Jul 21 0 0 0
Dec 21 0 0 0
Total 216,573 214,924 1,649

FCOJ
General Comments: FCOJ was higher after holding the lows of Tuesday and on forecasts for more dry weather in
Florida. Speculators have been covering short positions and going to long positions as the hurricane season got underway. A system has moved into the Delta and Southeast, but looks to impact areas north of Florida this weekend.. It is turning hot and dry in Florida. Fruit for the next crop is developing and are about as big as golf balls. Crop conditions are called good. Irrigation is being used a few times a week to help protect crop condition. Mostly good conditions are reported in Brazil as the harvest there is active.
Overnight News: Florida should get mostly dry weather. Temperatures will average near to above normal. Brazil should get scattered showers late this week and below normal temperatures.
Chart Trends: Trends in FCOJ are mixed. Support is at 102.00, 100.00, and 97.00 July, with resistance at 108.00, 113.00, and 117.00 July.

COFFEE
General Comments: Futures were higher and gained back a part of the big losses seen on Wednesday. The Real is still at high levels, but could become a problem for Coffee bulls as that market could be making a short-term top at this time. The Brazil harvest is still moving along at a slow pace. Reports indicate that the yields are not real strong and that the quality of the crop is poor due to extreme weather seen early in the growing season. Buyers are now more actively pursuing other origins, especially for certified or higher end coffees. 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. Earlier dry conditions also have apparently hurt the Vietnamese crop as it is being harvested. Yields are reported lower in the Central Highlands. Arrivals from producers have been disappointing. The charts show that both markets could trade in a sideways to up pattern for now as the market looks at weather and production potential of the next crop.
Overnight News: ICE certified stocks are slightly lower today at 2.388 million bags. The ICO daily average price is now 101.19 ct/lb. Brazil will get mostly dry conditions, with near to above normal temperatures. Vietnam will see scattered showers and storms.
Chart Trends: Trends in New York are mixed. Support is at 98.00, 97.00, and 95.00 July, and resistance is at 103.00, 106.00 and 108.00 July. Trends in London are mixed. Support is at 1400, 1380, and 1360 July, and resistance is at 1460, 1490, and 1520 July.

SUGAR
General Comments: Futures closed higher as the market worried about most Sugarcane in Brazil being processed into Ethanol and the late arrival of the monsoon in India. Trends on the daily charts turned up with the price action earlier this week, and futures held on a test of the breakout level yesterday. Processing of Sugarcane in Brazil has been off to a slow start and yields have been down due to the wet weather seen in central-south growing areas. There are concerns that the Indian monsoon will not be strong this year and that Sugarcane production could be hurt. It is about a week late now. It is hot and dry there so far, but there are signs that the monsoon is ready to develop. The government weather services there is looking for a normal monsoon, but many private forecasters expect less rain and warmer temperatures than normal. Very good conditions are reported in Thailand. Demand for Sugar has been average, and demand for ethanol is reported to be increasing.
Overnight News: Brazil will get mostly dry weather or light showers. Temperatures should be near to above normal.
Chart Trends: Trends in New York are up with objectives of 1290 and 1370 July. Support is at 1210, 1200, and 1180 July, and resistance is at 1250, 1300, and 1330 July. Trends in London are up with objectives of 346.00 and 362.00 August. Support is at 332.00, 329.00, and 325.00 August, and resistance is at 339.00, 344.00, and 345.00 August.

COCOA
General Comments: Futures moved higher and trends are trying to turn up again in both markets on the daily charts. It has been an impressive recovery after prices moved sharply lower at the beginning of the week. The mid crop harvest is active in West Africa and reports are generally positive. Ivory Coast arrivals are strong as are exports. Growing conditions are generally good in West Africa. Periods of showers and cooler temperatures were beneficial, and most in West Africa expect a very good mid crop harvest. Cameroon and Nigeria are reporting less production and prices there are reported strong. Conditions appear good in East Africa and Asia, but East Africa has been a little dry as has Malaysia.
Overnight News: Scattered showers and storms are expected in West Africa. Temperatures will average near 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 4.628 million bags.
Chart Trends: Trends in New York are mixed. Support is at 2380, 2350, and 2330 July, with resistance at 2440, 2450, and 2480 July. Trends in London are mixed. Support is at 1760, 1740, and 1730 July, with resistance at 1800, 1810, and 1820 July.

DJ Nigeria Midcrop Cocoa Season Over, Association Says
By Obafemi Oredein
Special to Dow Jones Newswires
IBADAN, Nigeria-Nigeria’s 2018-19 midcrop cocoa is over and expectations of high production haven’t been met, the head of the national cocoa association said Friday.
“We have gone past the midcrop. We are looking out for the main crop as we did not get up to expectation[s] of the midcrop,” said Sayina Riman, president of the Cocoa Association of Nigeria, blaming the shortfall on the country’s long dry spell.
The crop has ended a month ahead of the expected time in Nigeria, where the harvest usually runs from March or April to July.
Mr. Riman said in April that CAN projected midcrop cocoa production for the season would increase by 31% on year, with beans expected to be bigger than the previous year.
However, a long dry spell between February and early May stunted the growth of the midcrop and CAN lowered its forecast, saying that midcrop output may instead decline by 7% on year.
As the dry spell intensified with a dearth of rainfall, cocoa traders said in May that the midcrop output may decline by 12%. This was in spite of some heavy rains from the middle of the month.
Cocoa officials this week declared that the dry spell has ended in the country’s southwest and southeast cocoa regions following heavy rains, adding that the new downpours bode well for the 2019-20 main crops.
Mr. Riman explained that the overall output of the crop has not been calculated as the association “needs to collate what has been put together so that we can give you the authentic [production] figure.”
According to CAN, the midcrop represents 30% of Nigeria’s cocoa production of 280,000 to 300,000 metric tons per season. But that percentage could be lower this season, said a trader.



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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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