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Softs Report 09/18/19


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COTTON
General Comments: Cotton was lower as the weekly crop progress and condition report showed better than expected condition for the US crop. Ideas are that production will still be high enough for any demand potential. The market has been hurt as demand in the export market has been weak and is not really showing signs of improvement. This might not have mattered if the crop appears small, but the crop appears to be good enough for right now. It is a tale of two crops, with the Texas Panhandle still showing weaker conditions but most other areas showing good conditions.. Demand remains a problem for the market as the weekly export sales reports have not been strong. The weaker current demand should be enough to keep prices from going very high.
Overnight News: The Delta should see showers later in the week in northern and western areas and Southeast should see dry conditions. Temperatures should be mostly above normal. Texas will have dry conditions. Temperatures will be above normal. The USDA average price is now 59.09 ct/lb. ICE said that certified stocks are now 11,190 bales, from 11,190 bales yesterday.
Chart Trends: Trends in Cotton are mixed to up with objectives of 6650, 6910, and 6920 December. Support is at 6080, 6020, and 5980 December, with resistance of 6210, 6290, and 6340 December.

FCOJ
General Comments: FCOJ was a little lower as the tropical systems continue to curve away from the state. Traders were keeping a close eye on a storm that was forming in the western Atlantic. The track is unclear, but some forecasts suggest it will follow Dorian and Humberto and spare Florida from much of the impact. It is now past the high point in the hurricane season. Chart patterns are mixed in response to the hurricane threats and the potential for more systems to form in the short-term. The weather in Florida had been good as the state has seen frequent showers and storms that have aided in development in the fruit. Inventories in Florida are still well above a year ago. Fruit for the next crop is developing and are as big as baseballs. Crop conditions are called good.
Overnight News: Florida should get mostly dry conditions this week, then chances for showers and storms though the weekend. Temperatures will average near to above normal. Brazil should get mostly dry weather and near to below normal temperatures. ICE said that 0 notices were posted for delivery against September FCOJ contracts and that total deliveries for the month are now 0 contracts.
Chart Trends: Trends in FCOJ are mixed. Support is at 98.00, 97.00, and 95.00 September, with resistance at 105.00, 108.00, and 110.00 September.

COFFEE
General Comments: New York and London were both lower on selling that was seen in most ag markets and on a weaker Brazilian Real. The weather is still a problem in Brazil. The Arabica growing areas are waiting for rains to restart flowering after some rains earlier in the year. Current forecasts call for rains to start again near the end of September or in October. Vietnam crops are thought to be big despite some uneven growing conditions this year. It has been warm and dry at times, then the growing areas have seen some very heavy rains. Demand has been increasing over the last few years on the consumer level, but production potential is growing faster. The general overproduction means that producers in Brazil and Vietnam have the best chances to make money at current prices as they have more mechanized farming. The rest of the Coffee origin world will struggle due to more difficult growing terrain and higher costs of production. The price action from last week implied that futures have found a low value for now.
Overnight News: ICE certified stocks are lower today at 2.310 million bags. The ICO daily average price is now 97.76 ct/lb. Brazil will get mostly dry conditions with near normal temperatures. Vietnam will see scattered showers and storms mostly in the north. ICE said that 2 notices were posted for delivery against September contracts and that total deliveries for the month are now 493 contracts.
Chart Trends: Trends in New York are mixed to up with no objectives. Support is at 98.00, 97.00, and 95.00 December, and resistance is at 105.00, 106.00 and 108.00 December. Trends in London are mixed. Support is at 1300, 1290, and 1260 November, and resistance is at 1340, 1360, and 1370 November.

SUGAR
General Comments: New York and London both closed a little lower despite news that the Saudi refineries could be back up and running in the nest few weeks. London held better on support from reports of poor yields for Sugar beets in Europe and Russia. The fundamentals still suggest big supplies, and the weather in Brazil is good enough and India has improved to support some of the big production ideas. The weather has been much more uneven in production areas from Russia into western Europe. Those areas had a very hot and dry start to the growing season. Better weather was seen in early August then it turned hot and dry again. These areas need more rain and some cooler weather to provide better conditions for the final development of the crops.
Overnight News: Brazil will get mostly dry weather. Temperatures should be near normal.
Chart Trends: Trends in New York are mixed to up with no objectives. Support is at 1210, 1200, and 1190 March, and resistance is at 1250, 1270, and 1300 March. Trends in London are up with no objectives. Support is at 320.00, 317.00, and 314.00 December, and resistance is at 331.00, 335.00, and 337.00 December.

COCOA
General Comments: Futures closed higher on follow through speculative buying. Trends are up in both markets but futures are now getting closer to some big resistance areas on the charts and might struggle to rally much more. London appears to be the stronger market right now. The market could start to act weaker as the next main crop harvest comes closer to reality in West Africa. Some initial harvesting is being reported in Nigeria, but most areas will not start the harvest just yet. The weather in Ivory Coast has improved due to reports of frequent showers, but there are reports of disease in Ghana. There is also talk that the governments in Ivory Coast and Ghana are trying to force buyers to pay more to help support minimum pricing schemes that the governments have enacted. Growing and harvesting conditions in Asia are also reported to be good. The harvest is ongoing amid somewhat drier weather.
Overnight News: Scattered showers and storms are expected in West Africa. Temperatures will be on both sides of 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 little changed today at 3.882 million bags.
Chart Trends: Trends in New York are up with objectives of 2420 December. Support is at 2320, 2280, and 2230 December, with resistance at 2400, 2430, and 2460 December. Trends in London are up with objectives of 1970 December. Support is at 1790, 1760, and 1740 December, with resistance at 1830, 1850, and 1870 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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