MORNING SOFTS COMMENTS
Jack Scoville
Thursday,
November 07, 2019
COTTON
General Comments: Cotton was a little lower before the next round of USDA production and
supply and demand reports that will be released on Friday. USDA showed very good harvest progress in its
reports Monday night and the harvest is now slightly ahead of last year and the
five year average. Some buying interest
came from 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. The deal signing has
been pushed ack until December as both sides try to resolve the final issues,
but good progress is still being reported.
China is pushing for mutual tariff reductions that would be part of any
Phase One deal. There are reports that
it is buying high quality fiber from Brazil and would like to buy from the US
as well once a trade deal is finally done.
Export demand for the US has not been real strong as world economies are
turning softer. The harvest is
active. Quality reports have been high
until now and the crop yields appear to be strong. Western areas are also reporting good quality
and yields. Good quality and yields are
being reported in the Delta and Southeast.
Overnight News: The
Delta and Southeast should see dry weather except for some rain late in the
week and below normal temperatures.
Texas will have mostly dry conditions this weekend but rain is possible
on Thursday and Friday. Temperatures
will be below normal. The USDA average
price is now 60.83 ct/lb. ICE said that
certified stocks are now 39,233 ba1es, from 36,110 bales
yesterday.
Chart Trends: Trends in Cotton are mixed to down with
objectives of 63.00, 62.00, and 55.90 December.
Support is at 6340, 6290, and 6220 December, with resistance of 6460, 6500,
and 6550 December.
FCOJ
General
Comments: FCOJ was lower yesterday in
consolidation trading. Today could be
uneventful as well as the market really has nowhere to go. The fundamentals remain negative due to the
big production potential and weaker demand ideas. Demand remains a problem as many now prefer
to get Vitamin C in other ways. Good growing
conditions and increased oranges production estimates by USDA 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. Crop yields and quality should be high for
Florida this year and USDA could increase production estimates again on Friday.
Overnight
News: Florida should get mostly dry weather but showers
about Friday. Temperatures will average mostly
above normal but below normal this weekend.
Brazil should get mostly dry weather and above normal temperatures. ICE said that 6 notices were posted for
delivery against November contracts and that total deliveries for the month are
now 206 contracts. USDA said that net
Upland Cotton export sales were 164,500 bales this year and 118,600 bales next
year. Net Pima sales were 30,000 bales
this year and 32,500 bales next year.
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 in both markets on reports
of a lack of Coffee on offer and high differentials in Brazil. Trends are up in New York and London. The market has been stronger overall despite
ideas of big new crop production in both Brazil and Vietnam as exporters are running
tight on supplies. The Brazilian crop is
developing but some exporters say they are out of previous crop supplies to
sell. This includes Cooxupe, the biggest
exporter of Coffee in the world. 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 producers and traders find that they need to move some product. Brazil forecasts call for scattered showers
through the weekend. Many now anticipate
a big crop from Brazil next year.
Vietnam crops are thought to be big despite some uneven growing
conditions this year.
Overnight News: ICE certified stocks are lower today at 2.227
million bags. The ICO daily average
price is now 105.75 ct/lb. Brazil will
get scattered showers and above normal temperatures. Vietnam will see scattered showers in all
areas.
Chart Trends: Trends
in New York are up with no objectives.
Support is at 103.00, 102.00, and 100.00 December, and resistance is at 106.00,
108.00 and 109.00 December. Trends in
London are mixed to up with objectives of 1350, 1370, and 1410 January. Support is at 1300, 1280, and 1260 January,
and resistance is at 1340, 1360, and 1390 January.
SUGAR
General Comments: Futures closed lower in both
markets after making new highs for the move.
Trends are still generally up on the charts for both markets, but both
markets had a chance to create some significant upside potential on the charts
and declined to make that move. Ideas of
big supplies are not helping the bulls, but those supplies do not appear to be
available in the cash market at this time.
Reports indicate that little is on offer from India. 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. 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. Brazil is starting to produce
a little more Sugar and a little less Ethanol as mills react to prices and
market conditions. Reports of improving
weather in Brazil imply good crops there.
Overnight News: Brazil will get scattered showers. Temperatures should be near to above normal.
Chart Trends: Trends in New York are mixed
to up with objectives of 1280 and 1310 March.
Support is at 1240, 1220, and 1210 March, and resistance is at 1290, 1300,
and 1320 March. Trends in London are
mixed to up with objectives of 348.00 March.
Support is at 338.00, 334.00, and 331.00 March, and resistance is at 345.00,
348.00, and 351.00 March.
COCOA
General
Comments: Futures closed a little lower and held to the recent trading range. Harvest is active in West Africa and reports
are that good volumes and quality are expected.
Chart trends are mixed in New York but still mostly down in London. 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 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.
Overnight
News: Dry conditions or light showers 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 3.301
million bags.
Chart
Trends: Trends in New York are mixed. Support is at 2450, 2420, and 2390 December,
with resistance at 2510, 2530, and 2550 December. Trends in London are mixed to down with
objectives of 1850, 1790, and 1660 December.
Support is at 1870, 1850, and 1830 December, with resistance at 1920, 1940,
and 1950 December.
DJ Nigeria Could Lose 17% of Cocoa Harvest in
2019-20 Season, Says Industry Body
By Obafemi
Oredein
IBADAN,
Nigeria-The Cocoa Association of Nigeria said Wednesday that it expects the
country to lose 17% of its cocoa crop harvest in the 2019-20 season because of
weather problems and disease that have damaged the crop in producing states.
"Cocoa
is scarce across the country at the moment," said CAN President Sayina
Riman, due to low production engendered by the bad weather and disease.
In August,
Mr. Riman had said Nigeria expected to produce 305,000 to 310,000 tons of cocoa
in the current season that began in September/October.
He admitted
then that rainfall level was high with the likelihood of the black pod disease
outbreak hitting cocoa farms and damaging the crop but was optimistic that the
production forecast could be met.
Mr. Riman
said the country's southwest region has been hit hard.
The
southwest states of Ogun, Oyo, Osun, Ondo and Ekiti account for 70% of the
country's annual cocoa production.
"Nationally, we are expecting a drop from what I did forecast three
months ago. In terms of production we are going to see our forecast of 310,000
tons going down by 17%," said Mr. Riman.
Rainfall
was heavy in September and October causing flooding and the black pod disease
in cocoa farms and damaging cocoa crop.
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