Futures Commentary and Analysis


Morning Softs. 04/20/17
Jack Scoville - IF - Thu Apr 20, 9:45AM CDT

General Comments: Cotton was a little higher, with May leading the way before the deliveries start next week. First Notice Day for May futures is coming, and some mills are finally covering on call positions that they made in the cash market. The mills did not price sales from producers at cheaper levels and now are forced to pay higher prices. The mills have the same problem in July contracts, so July futures could see similar activity in June. Strong export demand should continue to support futures in the short term. The demand has been much better than anyone expected and caused US farmers to indicate interest in planting much more Cotton this year. Planting has been slow due to the recent rains in most US production areas. The market is seeing that the US has mostly good conditions for planting and development. Enough rain has fallen now, so some dry weather would be favorable for fieldwork, but forecasts call for more showers into next week. Export demand has remained strong and much stronger than expected by just about everyone. .
Overnight News: The Delta and Southeast should get more rain into the weekend, with dry conditions returning by Sunday. Temperatures should will average above normal. Texas will see the potential for rains again Friday and dry weather over the weekend. Temperatures will be above normal. The USDA average price is now 75.34 ct/lb. ICE certified stocks are now 301,768 bales, from 298,686 bales yesterday. USDA said that net Upland Cotton export sales were 226,300 bales this year and 117,100 bales next year. Net Pima sales were 10,700 bales this year and 1,200 bales next year.
Chart Trends: Trends in Cotton are up with objectives of 7810, 8050, and 8290 May. Support is at 7670, 7580, and 7510 May, with resistance of 7810, 7880, and 7940 May.

General Comments: FCOJ closed higher, but still could not penetrate resistance on the charts at about 165.00 May. Speculators appear to be buying, in part in anticipation of the hurricane season that begins next month. The market has been trying to extend recent grains as the weather remains dry in Florida, but weak demand is keeping a lid on prices. Dry weather in Florida has been the main reason for the buying interest. Domestic production remains very low due to the greening disease and drought. Trees have lost blooms and the fruit is developing. Small fruit is now being reported everywhere. Irrigation is being heavily used to prevent loss. The harvest has been very active. Early and Mid Oranges are moving mostly to processors, and this part of the harvest is winding down. The Valencia harvest is moving to processors and into the fresh market and is very active. Offers into the US from Brazil continue and will limit upside price potential from the short US crop. Demand reports remain poor.
Overnight News: Florida should see mostly dry weather and near to above normal temperatures. Showers are possible on Wednesday and Thursday. Brazil should get episodes of scattered showers and near normal temperatures.
Chart Trends: Trends in FCOJ are mixed. Support is at 162.00, 159.00, and 155.00 May, with resistance at 169.00, 170.00, and 173.00 May.

General Comments: New York and London both closed lower after failing to extend recent gains. Some analysts said the market suffered a technical correction, while others noted that some hedge longs had to liquidate before the May deliveries which start in New York today. Both ideas are probably correct. The markets are still in a trading range for now, but the market lost its bullish tone. A lot of analysts say that the market needs to rally due to the reduced production this year and next. However, the current market tone and fundamentals suggest that there is Coffee around. The world cash market remains slow, with a lack of demand the primary problem. Prices are low for producers and differentials remain generally weak. Ideas are that Robusta supplies are tight once again, and London is holding a sideways trend. New York continues to show a generally sideways pattern, but closed at or just above resistance areas yesterday. Many participants are on the way to Seattle for the SCAA convention that is late this week and into the weekend.
Overnight News: Certified stocks are lower today and are about 1.408 million bags. The ICO composite price is now 132.76 ct/lb. Brazil will get dry weather this week and showers this weekend. Temperatures should average above normal. Colombia should get scattered to isolated showers. Central America and southern Mexico should get mostly dry conditions. Temperatures should average near to above normal. ICE said that 11 notices were posted for delivery against May Contracts and that total deliveries for the month are 11 contracts.
Chart Trends: Trends in New York are mixed. Support is at 140.00, 139.00, and 138.00 July, and resistance is at 144.00, 146.00 and 148.00 July. Trends in London are mixed. Support is at 2170, 2150, and 2140 July, and resistance is at 2210, 2220, and 2230 July.

General Comments: New York and London closed lower and New York faded from strong resistance areas at the recent highs. The daily charts show generally mixed trends and that the markets are both in trading ranges. The EU has short stocks as does India, and prices have been firm in both areas. The EU said it was studying the idea of imports, but the Indian government has approved the import of Sugar with no duty. The amount authorized to import was at the low end  of expectations at 500,000 tons. The government is also moving to impose price and volume controls to avoid hoarding. The Indian weather Service expects a normal monsoon this year and the government and producers hope for production to recover in a big way in the nest production cycle. The world situation would imply that production can recover after El Nino induced losses last year. The weather service there is looking for a normal monsoon. Brazil could also have better crops this year as rains have been good in Center South areas. It remains much dryer than normal in the Northeast. Southeast Asia has good growing conditions.
Overnight News: Brazil will get dry weather or light showers this week and showers this weekend. Temperatures should average above normal.
Chart Trends: Trends in New York are mixed. Support is at 1650, 1620, and 1620 July, and resistance is at 1700, 1720, and 1790 July. Trends in London are mixed. Support is at 467.00, 465.00, and 458.00 August, and resistance is at 480.00, 485.00, and 489.00 August.

General Comments: Futures markets closed lower and were lower all day on demand concerns. A stronger US Dollar did not help matters, but Cocoa had no support, anyway. The chart patterns imply that the market is oversold and in need of a recovery rally. However, perceived fundamentals remain bearish. Production is improved this year and demand has not improved as much as hoped, according to the recent EU grind data. The North American grind data will be released today and is expected to show an increase in Cocoa bean demand from last quarter and last year. The production this year could be a record in Ivory Coast and is above last year in Ghana. Both countries ar experiencing moderate weather as rains have returned. Demand has been weak, but might start to improve soon as prices for Cocoa and products have turned much lower. Mostly good conditions are reported in Southeast Asia. The demand remains a question, with everyone expecting continued weaker demand in Europe. Ideas are that the US demand might be somewhat improved, but no one has real confidence in those ideas.
Overnight News: Scattered showers 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 normal. Brazil will get mostly dry conditions or light showers and near to above normal temperatures. ICE certified stocks are lower today at 5.048 million bags. ICE said that 0 contracts of Cocoa were delivered against May futures, and that total deliveries for the month are 0 contracts.
Chart Trends: Trends in New York are down with no objectives. Support is at 1890, 1880, and 1860 July, with resistance at 1950, 1990, and 2060 July. Trends in London are down with no objectives. Support is at 1450, 1420, and 1390 July, with resistance at 1560, 1570, and 1640 July.

Asia’s 1Q Cocoa Grinding Rise 19.17 % to 177,450 Tons: CAA
2017-04-20 07:57:06.654 GMT
By Anuradha Raghu
(Bloomberg) — Processing rose from 148,911 metric tons in
same period in 2016, according to email from Singapore-based
Cocoa Association of Asia.
* Down 5.9% q/q from 188,493 tons in 4Q
* NOTE: Report covers grinding from Malaysia, and members in
Singapore and Indonesia
* NOTE: Survey est. 1Q grinding +10% y/y to 163,802 tons Link
* NOTE: European Cocoa Processing Rose 1.1% Y/y in 1Q, ECA
Questions? Ask Jack Scoville today at 312-264-4322

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