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MORNING SOFTS COMMENTS

                                       

 

Jack Scoville

 

Thursday, October 17, 2019

 

 


Price Futures Group, CBOT

Chicago, IL

(312) 264-4322

jscoville@pricegroup.com

 

JSL, SA de CV

San Salvador, El Salvador (503) 2260-7806 jslsadecv@comcast.net

 

JSL, SA

jslsa@comcast.net


 

 

 

COTTON           

General Comments:  Cotton was higher on what appeared to be speculative buying tied to hopes for increased Chinese demand.  Speculators hope China will buy US Cotton but so far China has shown no interest.  It is more interested in meats and feed and oilseeds.  The Southeast was getting a lot of rain early this week but is now drier and ideas are that any losses will be transient.  The market is still finding support from deteriorating crop conditions.  Weekly USDA reports still show a tale of two crops with some crops very good to excellent but some crops very poor.  This dynamic was seen in the crop condition reports this week and brings into question the overall production potential.  USDA has estimated a big crop, but the crop might be a little smaller than they think.  This trend has been a feature of the market all year as the Texas Panhandle and nearby areas have been very hot and dry for a big part of the growing season.  Crop progress remains slightly above average. 

Overnight News:  The Delta should see mostly dry weather, and Southeast should see drier weather.  All areas should see showers this weekend  Temperatures should be near to below normal.  Texas will have mostly dry conditions.  Temperatures will be near to above normal.  The USDA average price is now 61.68 ct/lb.  ICE said that certified stocks are now 10,435 ba1es, from 10,523 bales yesterday. 

Chart Trends:  Trends in Cotton are mixed to up with objectives of 6460, 6590, and 6650 December.  Support is at 6370, 6220, and 6180 December, with resistance of 6470, 6530, and 6580 December.

 

FCOJ

General Comments:  FCOJ was mixed in quiet trading.  Trends remain sideways.  USDA estimated Florida production at 74 million boxes last week.  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 some irrigation has been used.  Crop yields and quality should be high for Florida this year.  Inventories of FCOJ in the state are high and are about 32% above last year.  Rains have started to fall in Brazil and trees should be flowering now.  Dry conditions have hurt production potential in Mexico.    

Overnight News:  Florida should get scattered showers on Friday, otherwise mostly dry weather.  Temperatures will average near to above normal.   Brazil should get scattered showers this week and drier weather this weekend and above normal temperatures.   

Chart Trends:  Trends in FCOJ are mixed.  Support is at 98.00, 96.00, and 95.00 September, with resistance at 101.00, 104.00, and 105.00 September.

 

COFFEE 

General Comments:  Futures were lower.  Trends in both markets are down again.  New York was weaker on more reports of good flowering in Brazil and Real weakness against the US Dollar.  The Real is now testing recent lows.  London has been the weaker market this week as the Asian harvest is underway.  Vietnam exports remain behind a year ago, but the market anticipates bigger offers as producers and traders will need to create new storage space and are expected to do this by selling old crop Coffee.  The Arabica growing areas got needed rains to start the flowering last week and reports indicate that flowering is off to a very good start.  More rain is expected this weekend or early next week.  Many now anticipate a big crop from Brazil next year.  However, there was some extreme cold and drought conditions earlier in the year that might have stressed trees and could hurt production potential for this year despite the good weather now.  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.  The rains are more moderate now.  Demand has been quiet over the last couple of weeks.  Differentials have been stable but buyers are not aggressive.

Overnight News:  ICE certified stocks are higher today at 2.245 million bags.  The ICO daily average price is now 94.26 ct/lb.  Brazil will get dry weather until some showers appear later in the weekend with above normal temperatures.  Vietnam will see scattered showers in all areas. 

Chart Trends:  Trends in New York are mixed to down with objectives of 90.00 December.  Support is at 91.00, 88.00, and 85.00 December, and resistance is at 95.00, 98.00 and 99.00 December.  Trends in London are down with no objectives.   Support is at 1180, 1150, and 1120 November, and resistance is at 1230, 1250, and 1280 November.

 

SUGAR               

General Comments:  Futures closed lower as the Brazilian Real moved lower to test recent lows.  London was also lower and failed against the upper end of its recent trading range.  Futures remain in a trading range but have been unable to turn trends up in the last few sessions.  Even talk of better demand from China could not create any buying interest.  USDA noted that Sugar prices in China are moving up and that industry was looking to buy in the world market.  Europe and Russia are probably buying in the world market after poor growing seasons.  Reports of improving weather in Brazil imply good crops there.  World petroleum prices are relatively cheap and are not supporting ethanol demand ideas.  Reports from India indicate that the country is seeing relatively good growing conditions and still holds large inventories from last year.  The weather there has improved with the monsoon and some areas are seeing some excessive rains 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 and there are reports of crop losses this year. 

Overnight News:  Brazil will get mostly dry weather today and scattered showers starting about Thursday.  Temperatures should be near normal.    

Chart Trends: Trends in New York are mixed.  Support is at 1220, 1210, and 1190 March, and resistance is at 1260, 1290, and 1300 March.  Trends in London are mixed.  Support is at 340.00, 337.00, and 335.00 December, and resistance is at 349.00, 355.00, and 357.00 December.

 

COCOA              

General Comments:  Futures closed a little lower in consolidation trading after the big rally on Tuesday.  Ideas of increasing harvest pressure offset positive grind data from Europe.  North America and Asia will release grind data for the quarter in the next couple of days.  The reports from West Africa imply that a big harvest is possible in the region, but no one knows how to handle to new marketing and producer support programs imposed by the governments of Ivory Coast and Ghana.  Ivory Coast arrivals are off to a fast start and are above year ago levels two weeks into the season.  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 and maintain good earnings for producers by paying a living wage differential and are looking to regulate the flow of Cocoa into the world market.  The moves could force the big Cocoa processors and grinders to pay more as they contract for Cocoa well in advance to ensure adequate supplies.

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 lower today at 3.574 million bags. 

Chart Trends:  Trends in New York are mixed to up with objectives of 2580 and 2680 December.  Support is at 2490, 2460, and 2440 December, with resistance at 2540, 2560, and 2570 December.  Trends in London are mixed.  Support is at 1890, 1870, and 1850 December, with resistance at 1930, 1950, and 1990 December.

 

DJ European Cocoa Demand Steadied in Second Quarter: ECA - Market Talk -- Market Talk

     0724 GMT - European demand for cocoa steadied in the third quarter, according to data from the European Cocoa Association that may allay traders' concerns about consumption. The volume of raw cocoa beans processed by large chocolate companies in the region rose 5.2% to 362,940 metric tons, from 344,890 tons in the three months through June. However, processing volumes, a proxy for demand, were still marginally lower than in the third quarter of 2018. Cocoa traders will now turn their eyes to Asian and North American grinding data due later in the week. Cocoa prices have been volatile recently, driven by the start of the new export season in West Africa, signs of a strong harvest in Ivory Coast, and the introduction of a new export-pricing system. (joe.wallace@wsj.com)

 

 

 

 

 



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