MORNING SOFTS COMMENTS
Jack Scoville
Wednesday,
October 23, 2019
COTTON
General Comments: Cotton was higher on hopes for new demand from China. Support came on follow through buying tied to
talk that the US and China were close to a partial deal that would allow
agricultural exports to flow to China in exchange for a truce in the tariff
increases. Cotton producers hope that
China will buy some Cotton from the US but China has not been doing this. In fact, overall report demand has been bad
for US Cotton and in the end was a factor to send the market down again today. It has concentrated on Soybeans and Pork
purchases instead and is expected to concentrate on meats buying in the coming
weeks. USDA on Monday once again showed
good crop progress as progress remains ahead of the five year average. Condition showed some improvement as well.
Overnight News: The
Delta should see mostly dry weather until showers return this weekend, and Southeast
should see mostly dry weather.
Temperatures should be on both sides of normal. Texas will have mostly dry conditions through
Wednesday, then episodes of scattered showers through the weekend. Temperatures will be on both sides of normal. The USDA average price is now 61.81
ct/lb. ICE said that certified stocks
are now 11,560 ba1es, from 9,162 bales yesterday.
Chart Trends: Trends in Cotton are mixed to up with
objectives of 6590, 6650, and 6670 December.
Support is at 6400, 6370, and 6220 December, with resistance of 6550, 6580,
and 6750 December.
FCOJ
General
Comments: FCOJ was mostly a little lower
as the storm over the weekend brought rain and some wind but proved to be
mostly beneficial for crops. January
closed slightly higher on spreads with November. Futures are now trying to break down out of the
range. Good growing conditions and
increased oranges production estimates are bearish. Private sources show that there are less
oranges per tree but the oranges are bigger and hold more acid. 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. A storm moved through central and northern
areas of the state over the weekend but mostly brought rain. Crop yields and quality should be high for
Florida this year. Inventories of FCOJ
in the state are high and are more than 30% above last year. Rains are falling in Brazil and trees should
be flowering now.
Overnight
News: Florida should get mostly dry weather. Temperatures will average above normal. Brazil should get mostly dry weather 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 mixed, with New York higher and
London a little lower. Trends in New
York are up for the short term while trends in London are still mostly
down. New York was higher despite more
reports of good flowering in Brazil as Cooxupe said it had sold most if not all
of its previous crop supplies. London
has been the weaker market 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.
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.
Overnight News: ICE certified stocks are slightly higher
today at 2.259 million bags. The ICO
daily average price is now 97.97 ct/lb.
Brazil will get scattered showers on Thursday and Sunday with near to above
normal temperatures. Vietnam will see
scattered showers in all areas.
Chart Trends: Trends
in New York are up with objectives of 101.00 December. Support is at 94.00, 91.00, and 88.00 December,
and resistance is at 99.00, 100.00 and 102.00 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.
DJ Uganda Coffee Exports to
Keep Rising -- Market Talk
1102 GMT - Uganda's coffee exports will
likely rise for the second season in a row in 2019-20 boosted by favorable
weather and maturing plantations, says the state coffee regulator, UCDA.
Shipments for the season, which started at the beginning of October may hit 5.1
million bags up from 4.4 million bags last season as favorable rains boost
coffee flowering and bean formation, UCDA notes. Exports rose 3% last season,
halting a declining trend from 2017 but are still below the record 4.6 million
bags exported three years ago amid low prices. Global coffee prices have
remained weak since 2016 due to ample supplies from Brazil, the world's top
grower. Uganda, Africa's top robusta grower, exports more coffee beans than any
other nation on the continent. (nicholas.Bariyo@wsj.com;@Nicholasbariyo)
SUGAR
General Comments: Futures closed lower on what
appeared to be speculative selling.
Reports indicate that little is on offer from India and are keeping an
eye on potential dry weather in Brazil.
Thailand might also have less this year due to reduced planted
area. However, most think there is still
more than enough Sugar for any demand and that India will have to sell sooner
or later. Europe and Russia are probably
buying in the world market after poor growing seasons. Reports of improving weather in Brazil imply
good crops there. There is some talk
that dry weather could hit Brazil growing areas, but for now these areas have
been getting rains and forecasts call for more showers this week. 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. 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 Thursday
and Sunday. Temperatures should be near
to above normal.
Chart Trends: Trends in New York are down
with objectives of 1190 March. Support
is at 1210, 1190, and 1170 March, and resistance is at 1240, 1260, and 1290 March. Trends in London are mixed to down with
objectives of 331.00 and 322.00 December. Support is at 333.00, 331.00, and 326.00 December,
and resistance is at 340.00, 342.00, and 345.00 December.
COCOA
General
Comments: Futures closed lower again yesterday on ideas that there is more than
enough beans to go around. Harvest is
now active in West Africa and reports are that good volumes and quality are
expected. The quarterly grind data was
mixed and left people wondering how good the demand for chocolate will be. Chart trends are turning down. The reports from West Africa imply that a big
harvest is possible in the region. Ivory Coast arrivals are off to a fast start
and are above year ago levels three 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 near
to below 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 3.485
million bags.
Chart
Trends: Trends in New York are mixed. Support is at 2440, 2410, and 2370 December,
with resistance at 2500, 2530, and 25760 December. Trends in London are down with objectives of 1850,
1790, and 1660 December. Support is at 1850,
1830, and 1790 December, with resistance at 1900, 1930, and 1950 December.
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