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Softs Report 02/21/2020


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COTTON
General Comments: Cotton was mixed to lower yesterday. Futures tried to rally on news that China had approved the first round of tariff reductions to comply with the deal with the US and that it will waive punitive tariffs at the first of next month. However, no one know for sure if and when they will buy Cotton. In addition, the Carona virus is affecting the global trade and world economies and the market is scared of lost business from the overall export market. Ideas that countries like India were about out of Cotton meant that demand was likely for this market sooner rather than later. Big buying from China could rally the market, but futures have already moved significantly higher in anticipation of any Chinese buying and the actual buying could become anti climatic. The Coronavirus has the chance to hurt trade in Cotton between the two countries. Chinese buyers might need less Cotton now as factories inside their country were closed for an extended holiday. All are reopen now, but the businesses are having trouble getting the workers to show up and do the work.
Overnight News: The Delta and Southeast should see some big rains today and Sunday. Temperatures should average near to below normal. Texas will have mostly dry weather but some very light precipitation is possible tomorrow and Sunday. Temperatures will trend to below normal for the week and above normal by Sunday. The USDA average price is now 63.94 ct/lb. ICE said that certified stocks are now 33,349 bales, from 33,349 bales yesterday. USDA said that net Upland Cotton export sales were 235,300 bales this year and 141,200 bales next year. Net Pima sales were 9,500 bales this year and 0 gales next year.
Chart Trends: Trends in Cotton are mixed. Support is at 6780, 6720, and 6680 March, with resistance of 6890, 6910 and 6990 March.

DJ On-Call Cotton – Feb 20
As of Feb 14. 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
Mar 20 10,673 18,098 -7,425 9,330 13,247 -3,917
May 20 24,599 21,091 3,508 10,187 7,642 2,545
Jul 20 25,258 24,132 1,126 4,336 4,148 188
Oct 20 0 0 0 0 0 0
Dec 20 20,377 19,346 1,031 20,032 19,077 955
Mar 21 7,988 6,735 1,253 1,180 1,038 142
May 21 3,255 3,035 220 178 178 0
Jul 21 6,437 6,052 385 816 816 0
Dec 21 1,128 1,128 0 2,176 1,892 284
Mar 22 466 466 0 13 13 0
Dec 22 0 0 0 7 7 0
Dec 23 0 0 0 7 7 0
Total 100,181 100,083 98 48,262 48,065 197
Open Change
Int
Mar 20 18,895 75,878 -56,983
May 20 106,410 83,712 22,698
Jul 20 42,691 40,413 2,278
Oct 20 35 77 -42
Dec 20 36,171 32,470 3,701
Mar 21 5,628 5,578 50
May 21 373 361 12
Jul 21 1,118 1,070 48
Dec 21 542 525 17
Mar 22 3 2 1
Dec 22 0 0 0
Dec 23 0 0 0
Total 211,866 240,086 -28,220

FCOJ
General Comments: FCOJ was lower yesterday and trends have turned sideways at best. There is a big crop of Oranges out there with not many outlets for consumption. 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 severe storms so far this year. Many areas have been dry lately and irrigation is being used. Crop yields and quality are reported to be high for Florida this year.
Overnight News: Florida should get mostly dry conditions. Temperatures will average near to below normal. Brazil should get scattered showers through the weekend and near to above normal temperatures.
Chart Trends: Trends in FCOJ are mixed. Support is at 96.00, 95.00, and 92.00 March, with resistance at 101.00, 102.00, and 105.00 March.

COFFEE
General Comments: Futures were lower in New York and in London as the US Dollar rallied and the Brazilian Real moved lower. Support came from a lack of supply in Brazil at this time and on concern that previous bad growing conditions have hurt production potential in the Cerrado, home of about 10% of all Brazil production. Selling came from the further deterioration in the Real against the US Dollar and on ideas of reduced demand due to the Carona virus and other health issues oversea. Weather in Brazil is reported to be good away from the Cerrado. Central America has had less than normal rains, especially in Honduras. The Asian harvest is underway but producers do not seem to be selling on ideas that prices are too low. Vietnam exports remain behind a year ago, but the market anticipates bigger offers. Vietnamese crops are expected to be big despite uneven growing conditions earlier in the year.
Overnight News: ICE certified stocks are unchanged today at 2.161 million bags. The ICO daily average price is now 104.83 ct/lb. Brazil will get scattered showers with near to below normal temperatures. Vietnam will see mostly dry conditions in the south and some light to moderate showers in the north. ICE said that 66 notices were posted for delivery against March contracts and tat total deliveries for the month are now 68 contracts.
Chart Trends: Trends in New York are mixed. Support is at 103.00, 100.00, and 97.00 March, and resistance is at 110.00, 111.00 and 114.00 March. Trends in London are mixed. Support is at 1250, 1240, and 1230 March, and resistance is at 1290, 1300, and 1320 March.

SUGAR
General Comments: New York and London closed lower in range trading. Strength in the US Dollar and weakness in the Brazilian Real were a reason for the selling. Some traders are expecting Sugar futures to correct lower after the recent run to higher prices. Reports indicate that little is on offer from India, although India should have a big supply inside the country. Thailand might also have less this year due to reduced planted area and erratic rains during the monsoon season. Losses in both countries would affect the White Sugar market more than New York. Reports of improving weather in Brazil imply good crops there and some analysts in Brazil are noting that the production has been very good. Farmers have been selling to mills but the harvest is now almost over so the supplies will start to tail off. Brazil mills continue to favor ethanol in the production mix, but current higher prices for Sugar make it economic to open more processing to Sugar instead of ethanol at this time.
Overnight News: Brazil will get scattered showers. Temperatures should be near to below normal through Thursday, then near to above normal.
Chart Trends: Trends in New York are mixed. Support is at 1530, 1480, and 1460 March, and resistance is at 1570, 1590, and 1610 March. Trends in London are mixed. Support is at 417.00, 410.00, and 404.00 May, and resistance is at 424.00, 425.00, and 435.00 May.

COCOA
General Comments: New York and London closed higher in range trading. London could be turning trends up at this time.. Harvest is active in West Africa and the results so far are very good. Ideas are that demand is currently very strong due to the current price action. The reports from West Africa imply that a big harvest is possible in the region. The main crop harvest should be starting to wind down now. Ivory Coast arrivals are strong and are above year ago levels. The weather in Ivory Coast is good. But it has been dry in Ghana and Nigeria.
Overnight News: Mostly dry conditions are forecast for West Africa. Temperatures will be 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 3.512 million bags. ICE said that 0 notices were posted for delivery against March futures and that total deliveries for the month are now 55 contracts.
Chart Trends: Trends in New York are mixed. Support is at 2820, 2790, and 2740 May, with resistance at 2890, 2920, and 2930 May. Trends in London are mixed. Support is at 2020, 1990, and 1940 May, with resistance at 2070, 2100, and 2130 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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