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Softs Report 11/14/19


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COTTON
General Comments: Cotton was a little lower. USDA showed that harvest progress is now head of the five-year average and some producers have been selling as certified stocks are higher. The increased supply against solid but not spectacular exports has kept the market from staging a strong rally. Uncertainty about a trade deal with China has kept some from buying as well. US Cotton producers have faced difficult weather all year and USDA posted smaller yields in its production estimates last week. The Texas Panhandle in particular has seen drought and now is seeing very cold and freezing temperatures. The Southeast has seen rain and then a drought and now is getting much below normal temperatures. The difficult growing conditions are the reason for the lower yields.
Overnight News: The Delta should see dry weather and below normal temperatures, but trending to near to above normal by early next week. The Southeast should get some showers today and tomorrow then turn dry. Texas will have mostly dry conditions. Temperatures will be variable and on both sides of normal. The USDA average price is now 61.67 ct/lb. ICE said that certified stocks are now 54,462 bales, from 51,114 bales yesterday.
Chart Trends: Trends in Cotton are mixed. Support is at 6410, 6390, and 6290 December, with resistance of 6500, 6550, and 6570 December.

FCOJ
General Comments: FCOJ was higher as cold weather moves into Florida. It might not damage crops this time, but this is a record cold air mass in the north and reminds speculators that it is time to start buying before the freeze season.. Overall chart patterns are not strong but futures are still in a range. Good growing conditions and increased oranges production estimates by USDA this season have been bearish. The weather has been great for the trees as there have been frequent periods of showers and no hurricanes or other severe storms so far this year. Some areas have been dry lately and irrigation is being used. Cold weather has invaded the eastern two-thirds of the US and temperatures in most areas are much below normal. However, Florida should escape as temperatures are forecast to stay above freezing. More moderate temperatures should return in the next couple of days. Crop yields and quality should be high for Florida this year. Inventories of FCOJ in the state are high and are more than 33% above last year.
Overnight News: Florida should get scattered showers this week and mostly dry weather this weekend. Temperatures will average mostly above normal but below normal this weekend. Brazil should get mostly dry weather and above normal temperatures. ICE said that 0 notices were posted for delivery against November contracts and that total deliveries for the month are now 206 contracts.
Chart Trends: Trends in FCOJ are mixed to down with objectives of 93.00 and 85.00 January. Support is at 96.00, 95.00, and 92.00 January, with resistance at 101.00, 102.00, and 104.00 January.

COFFEE
General Comments: Futures were higher yesterday on a lack of offer in the market. It looks like offers are not appearing for nearby shipments from Brazil and Vietnam so the market has been rallying looking for business. There is just not much on offer right now as Brazil exporters say they are running out of supplies from previous crops and as Vietnamese sellers are not selling. The Brazilian crop is developing as rains have recently improved. Reports from Brazil indicate that flowering is off to a very good start. Rains are expected again in Coffee areas this week. The Asian harvest is underway but producers do not seem to be selling on ideas that prices are too low to provide profits. Vietnam exports remain behind a year ago, but the market anticipates bigger offers as prices move higher. Vietnam crops are thought to be big despite some uneven growing conditions this year. However, recent rains have probably damage some coffee and caused at least minor losses.
Overnight News: ICE certified stocks are lower today at 2.195 million bags. The ICO daily average price is now 107.20 ct/lb. Brazil will get scattered showers this week and dry weather this weekend and above normal temperatures. Scattered showers are forecast for next week. Vietnam will see scattered showers in all areas, but trends are a little dryer now.
Chart Trends: Trends in New York are mixed to up with no objectives. Support is at 105.00, 104.00, and 103.00 December, and resistance is at 108.00, 110.00 and 111.00 December. Trends in London are mixed to up with objectives of 1410 January. Support is at 1380, 1360, and 1340 January, and resistance is at 1410, 1430, and 1460 January.

SUGAR
General Comments: Futures closed higher in both New York and London yesterday. Overall charts trends are turning up for the medium term in New York and are turning sideways in London. Ideas of tight offers even with a weaker Real are supporting Raw Sugar. The Real is now very close to recent lows but has stalled at these levels. White Sugar is the weaker market on ideas of big supplies and little demand in Europe but the supply ideas could start to change in the near term. Reports indicate that little is on offer from India. However, most think there is still more than enough Sugar for any demand and that India will have to sell sooner or later. Reports from India indicate that the country is seeing relatively good growing conditions and still holds large inventories from last year. However, these supplies are apparently not moving and this could be due to less government subsidy for mills and exporters.
Overnight News: Brazil will get scattered showers this week and dry weather this weekend. Scattered showers are forecast for next week. Temperatures should be near to above normal.
Chart Trends: Trends in New York are up with objectives of 1310 March. Support is at 1260, 1240, and 1230 March, and resistance is at 1290, 1300, and 1320 March. Trends in London are mixed. Support is at 337.00, 333.00, and 331.00 March, and resistance is at 345.00, 348.00, and 351.00 March.

DJ Brazil Center-South Sugar Crush Up 30.7% at 32.6M Tons in 2H Oct. — Unica
By Jeffrey T. Lewis
SAO PAULO–Brazilian sugar mills in the country’s center-south region crushed more cane in the second half of October compared with a year earlier, according to industry group Unica.
Center-south mills crushed 32.6 million metric tons of cane in the period, a rise of 30.7% from the same period a year earlier. They produced 1.5 million tons of sugar, up 57.8%, and made 2.05 billion liters of ethanol, an increase of 45.4%.
The production mix for the second half of last month was 32.1% sugar to 67.9% ethanol. A year earlier, the mix was 30.1% sugar and 69.9% ethanol.
Brazil is the world’s biggest sugar producer and exporter, and the center-south grows about 90% of the country’s cane.
In the season from April 1 through Nov. 1, mills in the region crushed 542.9 million tons of cane, up 6.3% from the same period a year earlier. Sugar production rose 3.3% to 25.2 million tons, and ethanol output rose 8% to 29.6 billion liters.
The production mix for the season through Nov. 1 was 35.1% sugar to 64.9% ethanol. A year earlier, the mix was 35.8% sugar and 64.2% ethanol.

COCOA
General Comments: Futures closed higher again and the market has moved to new contract highs. Ideas of less offer at this time are supporting futures. Harvest is now active in West Africa and reports are that good volumes and quality are expected. The reports from West Africa imply that a big harvest is possible in the region. Ivory Coast arrivals are strong and are above year ago levels. The weather in Ivory Coast has improved due to reports of frequent showers. The precipitation is a little less now so there are no real concerns about disease. Ideas are that the next crop will be very good. Both Ivory Coast and Ghana are doing what they can do boost Cocoa prices.
Overnight News: Scattered showers are expected in West Africa. Temperatures will be 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 lower today at 3.232 million bags.
Chart Trends: Trends in New York are up with objectives of 2850 December. Support is at 2650, 2600, and 2570 December, with resistance at 2740, 2800, and 2840 December. Trends in London are up with objectives of 2290 December. Support is at 1990, 1950, and 1940 December, with resistance at 2110, 2140, and 2170 December.

DJ Nigeria Welcomes Ghana President’s Call to Participate in Cocoa Price Agreement
By Obafemi Oredein
IBADAN, Nigeria–Nigeria’s national cocoa organization said Wednesday that it welcomes the move by Ghana and Ivory Coast to include both Nigeria and Cameroon–which jointly produce over 600,000 tons of cocoa a year–in a minimum cocoa price agreement.
In June, Ghana and Ivory Coast–which together produce about 65% of the world’s cocoa–agreed on a price floor agreement of $2,600 a ton, later adding that buyers would pay an additional $400 in support of a living income differential for cocoa farmers.
Ghana’s President Nana Akufo-Addo said Tuesday that Ghana was ready to liaise with other regional cocoa producers to participate in the agreement.
“Structural issues have to be addressed first,” Mr. Akufo-Addo said, noting Nigeria’s lack of a marketing board, “but such an association has to be the way forward.”
Cocoa Association of Nigeria President Sayina Riman said in June that Nigeria and Cameroon–which together account for over 10% of global cocoa production–were not consulted before the $2,600 cocoa price and the $400 LID were agreed upon, but that is it a “welcome development” to have now been invited.
Asked if Nigeria and Cameroon would attend a meeting to discuss the cocoa floor price agreement, Mr. Riman said: “We will be happy to be at the meeting. We want to make sure that the price floor issue works for the benefit of the entire industry.”



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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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