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Softs Report 07/31/2020


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COTTON
General Comments: Cotton closed higher as bad growing conditions continued in West Texas. West Texas is now getting some rains from the tropical system that hit the state, but this will only serve to stabilize the situation. Export demand for US Cotton has been poor for the last few weeks but were improved yesterday. The world is starting to slowly recover from the Coronavirus scare and some stores are starting to open again after being closed for weeks. However, economic improvement in the US was thrown into doubt as Coronavirus cases surged higher in states that had reopened. The retail demand has been slow to develop as many consumers got hurt economically due to stay at home orders during the height of the pandemic and have little disposable funds to spend on clothes. Demand will slowly improve but the industry should have plenty of supplies to work with in the short term. The US weather situation is mixed, with good rains noted in the Southeast and good conditions in the Midsouth. However, it has been very hot and dry in West Texas and crops there are suffering.
Overnight News: The Delta will get scattered showers and Southeast will get isolated showers. Temperatures should be near to above normal. Texas will have scattered showers. Temperatures will average near to above normal. The USDA average price is now 58.53 ct/lb. ICE said that certified stocks are now 7,045 bales, from 7,545 bales yesterday.
Chart Trends: Trends in Cotton are mixed. Support is at 6180, 6080, and 5950 December, with resistance of 6340, 6430 and 6580 December.

FCOJ
General Comments: FCOJ was a little lower. Trends are still turning down in this market. The fundamentals remain mostly positive for prices, but it has been a while since any new bullish input was seen. Florida production is now estimated at 67 million boxes, unchanged from last month. New crop production could be hurt by an extended flowering season for the early varieties. California and US production was increased. Support is coming from the continued effects from the Coronavirus that are keeping people at home and drinking Orange Juice. Demand from grocery stores has remained strong in response to the increased consumer demand. Inventories in cold storage remain solid so there will be FCOJ to meet the demand, but inventories are creeping lower. There is increasing concern about the food service demand not improving even with the partial opening of the states. The weather in Florida is currently good for the crops. The tree condition is called good. Brazil has been dry and irrigation has been used. The harvest is active in Brazil.
Overnight News: Florida should get isolated showers. Temperatures will average near to above normal. Brazil should get dry conditions and near to below normal temperatures.
Chart Trends: Trends in FCOJ are down with objectives of 113.00 and 111.00 September. Support is at 118.00, 116.00, and 108.00 September, with resistance at 123.00, 126.00, and 128.00 September.

COFFEE
General Comments: New York closed higher and London closed mixed on the weaker US Dollar and less offer from some producing countries. Chart trends remain up for at least the short term, with New York now the leader for the up move. It appears to be a supply driven market right now. Vietnam was dry during flowering time and is dry again. Production ideas are lower. Demand overall remains down with the US still locking down due to the Coronavirus resurgence in some states. The demand from coffee shops and other food service operations is still at very low levels. Consumers are still drinking Coffee at home and the return of the Coronavirus outbreak will keep things that way. Europe is still emerging from lock downs but there have been reversals as Coronavirus has reemerged. The Brazil harvest is active but shipping and collection have become very difficult due to the widespread outbreak of the Coronavirus there. Even so, the pickers are showing up for work and ports are operating normally. Ideas are that production will be very strong this year as it is the on year for the trees. The strong production ideas are coming despite hot and dry weather seen in the country at flowering time.
Overnight News: ICE certified stocks are lower today at 1.594 million bags. The ICO daily average price is now 111.90 ct/lb. Brazil will get mostly dry conditions with near to above normal temperatures. Vietnam will see light to moderate showers.
Chart Trends: Trends in New York are up with no objectives. Support is at 114.00, 110.00, and 109.00 September, and resistance is at 120.00, 123.00 and 129.00 September. Trends in London are up with no objectives. Support is at 1330, 1310, and 1290 September, and resistance is at 1390, 1400, and 1430 September.

SUGAR
General Comments: New York and London closed higher but remain in the recent trading range. Longer term trends remain up in both markets. Ideas are that there is plenty of Sugar for the world market, but getting the Sugar moved is becoming more difficult with the widespread Coronavirus outbreak in both Brazil and India. Brazil mills have shifted part of the crush to Sugar production due to less ethanol demand. India is thought to have a very big crop of Sugarcane this year but getting it into Sugar and into export position has become extremely difficult due to Coronavirus lock downs. Thailand might have less this year due to reduced planted area and erratic rains during the monsoon season. There are reduced flows from rivers from China to hinder irrigation of the crops.
Overnight News: Brazil will get dry conditions or isolated showers. Temperatures should average near normal.
Chart Trends: Trends in New York are mixed to up with objectives of 1240 and 1310 October. Support is at 1170, 1150, and 1130 October, and resistance is at 1220, 1240, and 1260 October. Trends in London are up with objectives of 373.00 and 401.00 October. Support is at 360.00, 350.00, and 347.00 October, and resistance is at 370.00, 376.00, and 378.00 October.

COCOA
General Comments: New York and London closed higher. Trends are still up in both markets. There are a lot of demand worries as the Coronavirus is not going away and could be making a comeback in the US. Europe is still trying to open its markets again but the Coronavirus is still around and consumers are reluctant to buy. Harvest is now over for the main crop in West Africa and the results are very good. But, prices are able to rally due to the end of the harvest. The reports from West Africa imply that a big harvest in the region. Arrivals are on a pace about the same as last year. Ideas are that Southeast Asia also has good crops.
Overnight News: Isolated to scattered showers are forecast for West Africa. Temperatures will be 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 4.048 million bags.
Overnight News:
Chart Trends: Trends in New York are up with objectives of 2430 September. Support is at 2300, 2250, and 2220 September, with resistance at 2400, 2430, and 2470 September. Trends in London are up with objectives of 1640 and 1720 September. Support is at 1580, 1550, and 1520 September, with resistance at 1660, 1700, and 1720 September.



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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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