Today's softs: weather, setbacks and dollar gains

July 20, 2017 10:00 AM

General Comments:  New York was higher and London was lower yesterday in what seemed to be quiet trading.  The weather in Brazil has turned interesting again, as cold temperatures were seen over the last couple of nights.  No apparent damage was done, but some damage could show up later.  Temperatures in Coffee áreas were at or just above danger levels in Parana, and above danger levels in the rest of the major growing áreas.  There are also reports of pests entering fields as the harvest has been delayed somewhat due to rains.  The Real was higher yesterday against the U.S. Dollar to discourage selling by producers.  Talk that there could be another year of production that is less than demand is still around..  Buying interest improved in cash markets last week due mostly to the potential trend change in futures.  Prices have the chance to move as high as 140.00 NY September within the next couple of weeks.

Overnight News:  Certified stocks are unchanged today and are about 1.542 million bags.  ICE said that 2 contracts were delivered against New York July futures today, and that total delivery for the month is now 56 contracts.  The ICO composite price is now 128.95 ct/lb.  Brazil will get mostly dry weather.  Temperatures should average below normal.  Colombia should get scattered to isolated showers.  Central America and southern Mexico should get scattered showers, with big storms today in southern Mexico.  Temperatures should average near to above normal.           

Chart Trends:  Trends in New York are up with objectives of 140.00 and 150.00 September.  Support is at 131.00, 128.00, and 126.00 September, and resistance is at 137.00, 139.00 and 142.00 September.  Trends in London are mixed.   Support is at 2100, 2060, and 2020 September, and resistance is at 2150, 2170, and 2180 September.

General Comments:  Cotton was mostly a little lower yesterday in quiet trading.  The market is still trying to complete a bottom on the daily charts.  Some more support was seen in the market due to forecasts for hot and dry weather that are causing some crop stress to continue in parts of Texas and into western growing áreas.  There does not seem to be any relief in sight.  The growing weather in the US Delta and Southeast is generally good and crop conditions are reported to be mostly good by producers and observers.  Warmer temperatures have arrived to support the development and there has been more than enough rain.  Monsoon rains are reported as mostly good in India and Pakistan and ideas of bigger production in that part of the world.  Northern áreas are getting good rains now, and southern and Eastern áreas are in very good condition. 

Overnight News:  The Delta and Southeast will see mostly dry weather.  Temperatures should average near to above normal.  Texas will see mostly dry weather. Temperatures will average above normal.  The USDA average price is now 66.15 ct/lb.  ICE certified stocks are now 47,842 bales, from 49,814 bales yesterday.  ICE said that 0 contracts were delivered against July contracts and that total delivery for the month are now 1,533 contracts.  USDA said that net Upland Cotton export sales were 27,200 bales this year and166,200 bales next year.  Net Pima sales were 2,500 bales this year and 5,500 bales next year.  China imported 85,430 tons of Cotton in May, up 9.25% from last year.  The calendar year to date imports are now 564,819 tons, up 58% from last year.     

Chart Trends:  Trends in Cotton are mixed.  Support is at 6770, 6730, and 6680 December, with resistance of 6840, 6870, and 6890 December.

General Comments:  FCOJ closed a little lower on forecasts for beneficial weather to continue in Florida.  There are currently no threats to production of Oranges in Florida.  There are some storms starting to form, but so far these are not forecast to hit the state.  The demand side remains weak and there are plenty of supplies in the U.S. despite the poor production.  Domestic production remains very low due to the greening disease and drought.  Trees now are showing the fruit of varying sizes and overall conditions are called good after rains over the last month.  Th estate had been in a drought, but the drought is gone now and trees have responded well to the increased moisture.  Brazil crops remain in mostly good condition.

Overnight News:  Florida should get scattered showers and near to above normal temperatures,  Brazil should get mostly dry conditions and near to below normal temperatures. ICE said that 0 notices were posted for delivery today and that total delivery for the month are now 2 contracts.

Chart Trends:  Trends in FCOJ are mixed to down with no objectives.  Support is at 124.00, 121.00, and 118.00 September, with resistance at 130.00, 132.00, and 136.00 September.

General Comments:  Futures in London and New York were higher, and New York appears to be breaking out to the upside on the daily charts.  There is no real news out there, but it does seem that all of the bearish news is now part of the price.  Futures have been trending lower for most of the year, so a turn at this time is very possible.  Growing conditions are rated good in just about all producer countries right now, and the big harvest in Brazil continues.  The harvest pace has been below last year until now.  Production in India and Thailand is expected to improve.  It is raining in about half of India now as the monsoon is active.  However, the north and west has yet to see much rain, and other áreas that have seen rain are still a little short for best production potential.  Thailand also hopes for an improved monsoon season this year and is getting rains now.  The rest of Southeast Asia is seeing average to above average rains so far this year.  Some problems are being reported in Europe and Russia for the beet Sugar sale    

Overnight News:  Brazil will get mostly dry conditions.  Temperatures should average near to above normal.  China imported 186,765 tons of Sugar in May, up 38% from last year.  Calendar year to date imports are now 1.3 million tons, up 32% from last year.  

Chart Trends: Trends in New York are mixed to up with objectives of 1540 and 1660 October.  Support is at 1390, 1370, and 1320 October, and resistance is at 1470, 1510, and 1530 October.  Trends in London are mixed.  Support is at 390.00, 385.00, and 377.00 October, and resistance is at 400.00, 407.00, and 410.00 October.

General Comments:  Futures markets were higher as the Asian grind data was strong, but prices are still holding to the trading range.  The North American grind data should be released later today.  The analysts keep talking about a supply glut from West Africa as Ivory Coast had a huge production this year and is expected to have a big crop starting harvest this Fall, although the production should be less than the last year.  Production this year was over 1.9 million tons, and production in the coming year is expected by at least some analysts to be near 1.7 million tons.  However, the market is acting as if all of the bad news is now part of the price.  The news last week was more price positive as Callebaut reported strong earnings and as offer volumes seem to be falling in West Africa.  Reports from Ivory Coast indicate it could lose some production from local flooding.  The move came after positive European demand news released on Tuesday as the quarterly grind was above expectations.  All of the countries in West Africa expect higher year on year production.  Ivory Coast has already sold a big part of the projected production for the coming year.  The growing conditions in other parts of the world are generally good.  East African conditions are now called good, although more rain would be beneficial.  Brazil remains too dry.  Good conditions are still being reported in Southeast Asia. 

Overnight News:  Scattered showers and storms are expected in West Africa.  Temperatures will average near to above normal.  Malaysia and Indonesia should see scattered showers in all areas.  Temperatures should average near to above normal.  Brazil will get mostly dry conditions or light showers and near to above normal temperatures.  ICE certified stocks are lower today at 5.472 million bags.      

Chart Trends:  Trends in New York are mixed to up, with no objectives.  Support is at 1890, 1830, and 1790 September, with resistance at 1950, 1990, and 2010 September.  Trends in London are mixed.  Support is at 1500, 1450, and 1430 September, with resistance at 1540, 1570, and 1600 September.

About the Author

Jack Scoville is a veteran futures market analyst specializing in grains, softs, rice, oilseeds, and tropical products such as coffee and sugar. His industry contacts in South America, Europe, Asia, and North America provide him with a unique and comprehensive view of these markets. 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, starting with The PRICE Futures Group since it was established in 1988.