Futures Commentary and Analysis

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Morning Softs 05/19/17
Jack Scoville - IF - Fri May 19, 10:05AM CDT

COTTON
General Comments: Cotton was lower. The charts imply that the current up move is over as July has now returned to the previous trading range. Cotton has become available to the market as the rally has brought Cotton into the cash market and also into certified stocks. The push to the highs might have hurt demand in the short term. Futures are finding support from mills who sold basis levels but never covered these positions in futures. They are being squeezed now, but wire reports suggest that they are finding ways to get covered. Planting conditions remain mixed due to recent cold and wet weather. Warmer temperatures and more wet weather is expected this week.. Certified stocks have moved sharply higher in the last month as an indication of increased farm selling and somewhat reduced overall demand.
Overnight News: The Delta and Southeast should get more rain this weekend. Temperatures should will average near to above normal. Texas will see mostly dry weather. Temperatures will be above normal. The USDA average price is now 76.56 ct/lb. ICE certified stocks are now 402,998 bales, from 387,267 bales yesterday. ICE said that 0 contracts were tendered for delivery for May and that total deliveries for the month are now 735 contracts.
Chart Trends: Trends in Cotton are mixed to down with objectives of 7570 and 7370 July. Support is at 7770, 7730, and 7620 July, with resistance of 8020, 8130, and 8220 July.

FCOJ
General Comments: FCOJ closed a little lower again yesterday, but felt little pressure from the political problems in Brazil. The president there is accused of offering bribes, but has denied the charges. The daily chart are starting to show a down trend again as futures moved to new lows for the move. The crop is still small, but weak domestic demand is helping keep prices under pressure, as are the expectations of increased imports of FCOJ from Brazil. Domestic production remains very low due to the greening disease and drought. Trees now are showing small fruit. Irrigation is being heavily used to prevent loss as the state is in drought and there are no forecasts for rain for the next week. The Valencia harvest is moving to processors and into the fresh market and is starting to wind down. Brazil crops remain in mostly good condition.
Overnight News: Florida should see mostly dry weather and near to above normal temperatures, Brazil should get mostly dry conditions and near normal temperatures. ICE said that 0 contracts were tendered for May delivery today and that total deliveries for the month are now 26 contracts.
Chart Trends: Trends in FCOJ are down with objectives of 135.00 July. Support is at 139.00, 136.00, and 133.00 May, with resistance at 145.00, 148.00, and 150.00 May.

DJ Florida FCOJ Movement And Pack – May 18
In mm ps, (million pounds solid). Source: Florida Department of Citrus (FDOC)
WEEK ENDING: 5/13/2017
Corresponding
Current Week Last
Week Season
5/13/2017 5/14/2016 % Change
CARRY OVER, RECEIPT & PACK
Carry Over
Bulk 205.01 280.66 -27.0%
Retail/Institutional 8.02 7.93 1.2%
Total 213.03 288.59 -26.2%
Pack
Bulk 6.49 3.88 67.4%
Retail/Institutional 1.55 1.56 -0.7%
Total Pack 8.04 5.44 47.8%
Reprocessed -4.10 -2.53 -61.9%
Pack from Fruit 3.94 2.91 35.6%
Receipts & Losses
Net Gain or Loss -0.07 0.37 -100+%
Imports – Foreign 5.74 5.96 -3.7%
Domestic Receipts 0.16 0.98 -84.1%
Receipts of Florida Product
from Non-Reporting Entity – 0.00 -100.0%
Chilled OJ used in FCOJ – 0.00 -100.0%
Reprocessed FCTJ – 0.05 -100.0%
Total Carry Over, Receipt & Pack
Bulk 213.23 289.37 -26.3%
Retail/Institutional 9.57 9.49 0.9%
Total 222.80 298.86 -25.5%
MOVEMENT
Bulk
Domestic 4.55 3.25 40.1%
Exports 1.03 0.16 100+%
Total (Bulk) 5.58 3.41 63.8%
Retail/Institutional
Domestic 1.06 2.01 -47.3%
Exports – – NC
Total (Retail/Inst) 1.06 2.01 -47.3%
Total Movement 6.64 5.42 22.6%
ENDING INVENTORY
Bulk 207.65 285.97 -27.4%
Retail/Institutional 8.51 7.48 13.8%
Ending Inventory 216.16 293.44 -26.3%
Total Same
Total Season Period Last
To Date Season
13-May-17 14-May-16 % Change
CARRY OVER, RECEIPT & PACK
Carry Over
Bulk 212.24 281.45 -24.6%
Retail/Institutional 6.78 7.81 -13.2%
Total 219.03 289.26 -24.3%
Pack
Bulk 132.63 157.09 -15.6%
Retail/Institutional 46.80 51.86 -9.8%
Total Pack 179.43 208.95 -14.1%
Reprocessed -108.14 -117.07 7.6%
Pack from Fruit 71.29 91.88 -22.4%
Receipts & Losses
Net Gain or Loss -3.38 -0.72 -100+%
Imports – Foreign 165.45 136.67 21.1%
Domestic Receipts 3.04 10.58 -71.3%
Receipts of Florida Product 0.73 0.16 100+%
from Non-Reporting Entity 2.56 5.18 -50.5%
Chilled OJ used in FCOJ 0.39 1.73 -77.1%
Reprocessed FCTJ
Total Carry Over, Receipt & Pack
Bulk 405.52 475.05 -14.6%
Retail/Institutional 53.58 59.68 -10.2%
Total 459.10 534.73 -14.1%
MOVEMENT
Bulk 144.15 158.81 -9.2%
Domestic 53.72 30.27 77.4%
Exports 197.87 189.08 4.6%
Total (Bulk)
Retail/Institutional
Domestic 45.07 52.20 -13.7%
Exports – – NC
Total (Retail/Inst) 45.07 52.20 -13.7%
Total Movement 242.94 241.29 0.7%
ENDING INVENTORY
Bulk 207.65 285.97 -27.4%
Retail/Institutional 8.51 7.48 13.8%
Ending Inventory 216.16 293.44 -26.3%

COFFEE
General Comments: New York and London closed lower as the Brazilian Real moved sharply lower in response to news of more political turmoil in Brazil. The president there was accused is offering hush money to some people and the offer is supposed to be on tape. The currency weakness offered producers to sell for more in local currency terms even with the lower futures prices in New York. Ideas of better world production were seen once again as many look for stronger crops with coming harvests, and demand ideas remain very soft as most roasters are still not buying much in world cash markets. However, many traders expect little overall increase in world production at this time as the growing conditions in many areas have not been that good. The big shorts in New York are the commercials who apparently are finally closing short positions at least in part as they close positions on Coffee bought at higher prices. They are noted as buying futures at this time, and producers are said to be selling in deferred months. Differentials are stable.
Overnight News: Certified stocks are higher today and are about 1.443 million bags. The ICO composite price is now 123.48 ct/lb. Brazil will get showers and storms this weekend. Dry weather returns next week Temperatures should average near to 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 0 notices were posted for delivery against May contracts and that total deliveries for the month are 666 contracts.
Chart Trends: Trends in New York are mixed to down with objectives of 128.00 July. Support is at 128.00, 125.00, and 122.00 July, and resistance is at 135.00, 138.00 and 140.00 July. Trends in London are mixed. Support is at 1950, 1940, and 1900 July, and resistance is at 2010, 2040, and 2070 July.

SUGAR
General Comments: New York and London both pushed lower in early trading as the Real worked lower. The political turmoil in Brazil caused the selling. Futures held chart Support and closed well off the lows. The market held well given the news. Ideas are that world Sugar production will be higher as long as Brazil keeps the current percentages of Sugar and Ethanol production. However, the delivery of cane to Brazil mills has been down so far this year. It is very early in the season, and ideas are that the arrivals will improve with time. Ideas are also that India and Thailand will have bigger crops this year after the failed monsoon cut Sugarcane production in both countries last year. The Indian weather Service expects a 96% normal monsoon this year and the government and producers hope for production to recover in a big way in the next production cycle. Brazil could also have better crops this year as rains have been good in Center South areas. It remains much drier than normal in the Northeast, but there has been some rain. Southeast Asia has good growing conditions. Demand remains a question as Raw Sugar futures are leading White Sugar futures higher so far this week.
Overnight News: Brazil will get a few showers this week and big rains this weekend. Temperatures should average near to below normal.
Chart Trends: Trends in New York are mixed to up with objectives of 1675 and 1750 July. Support is at 1550, 1530, and 1500 July, and resistance is at 1630, 1650, and 1700 July. Trends in London are mixed to up with objectives of 457.00 and 474.00 August. Support is at 447.00, 444.00, and 439.00 August, and resistance is at 463.00, 465.00, and 468.00 August.

COCOA
General Comments: Cocoa futures closed higher and short term trends are turning up again. It needs to make new weekly highs in both New York and London to create additional buying interest and send prices sharply higher. The price recovery has come as the West African main crop harvest has ended and the mid crop harvest has started. That makes less supply available to the market, although supplies should still be big enough for any demand at this time. The recovery in demand has been weak so far, but demand is expected to continue to grow in the next few months. Traders look for demand to improve as lower prices filter down to the retail level, but chocolate prices have been holding strong at stores. The fundamentals remain mostly bearish, but are now part of the price. Production is improved this year and demand has not improved as much as hoped, according to the recent EU grind data.
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 normal. Brazil will get mostly dry conditions or light showers and near to above normal temperatures. ICE certified stocks are higher today at 5.763 million bags. ICE said that 0 contracts of Cocoa were delivered against May futures, and that total deliveries for the month are 591 contracts.
Chart Trends: Trends in New York are up with objectives of 2150 July. Support is at 2050, 1980, and 1960 July, with resistance at 2100, 2130, and 2150 July. Trends in London are up with objectives of 1710 Juy. Support is at 1540, 1520, and 1490 July, with resistance at 1630, 1650, and 1670 July.

 

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