Futures Commentary and Analysis

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Morning Softs. 01/11/17
Jack Scoville - IF - Wed Jan 11, 10:55AM CST

COTTON
General Comments: Cotton futures closed slightly higher in consolidation trading before the USDA reports on Thursday. USDA will issue its annual production report on Thursday. The trade will look for high production estimates after the big production estimates released in November. The monthly supply and demand updates should continue to show strong export demand. The demand might stay stronger as there are conflicting production reports from India, where the market remains a mess due to the currency changes made by the government. The US harvest is over and offers should start to decrease in domestic cash markets. Buying interest could increase as India remains out of the market due to the economic changes there and as China could continue to buy more due to untimely rains at harvest time that might have hurt fiber. They will most likely blend imports with domestic production.
Overnight News: The Delta should get precipitation again starting Saturday. Temperatures should will average above normal. The Southeast should dry weather with warm temperatures. Texas will see mostly dry weather through Thursday, then some precipitation on Friday and over the weekend. Temperatures will average above normal this week and below normal this weekend
ed. The USDA average price is now 71.49 ct/lb. ICE certified stocks are now 108,133 bales, from 101,900 bales yesterday.
Chart Trends: Trends in Cotton are mixed to up with objectives of 7860 March. Support is at 7270, 7240, and 7150 March, with resistance of 7420, 7480, and 7540 March.

FCOJ
General Comments: FCOJ closed lower again as the Florida harvest was active amid good weather conditions. Early and Mid oranges are being harvested for processing. There are no frosts or freezes in the forecast for Florida as temperatures will turn warm again this week. It has been dry, and producers have been forced to irrigate frequently. However, some showers are expected this week. Brazil is expecting a sharp recovery from the drought induced production losses of last year. That would put production near the historical normal and alleviate many concerns about the reduced Florida production for the world and the US market. Sao Paulo state is getting good weather and crop conditions are called good. However, the production area has turned drier and trees could soon show signs of stress.
Overnight News: Florida should see dry weather or light showers and above normal temperatures. Brazil should get episodes of scattered showers and near to below normal temperatures. ICE said that 0 contracts of FCOJ were delivered today and that total deliveries for the month are now 0 contracts.
Chart Trends: Trends in FCOJ are down with objectives of 169.00 and 164.00 March. Support is at 176.00, 174.00, and 168.00 March, with resistance at 186.00, 191.00, and 198.00 March.

COFFEE
General Comments: Futures were higher on more reports that dry weather in Brazil was affecting production potential. It remains dry in Robusta areas,but Arabica areas appear in good shape. There are expectations now for production to range as high as 55 million bags, with almost all estimates for all Brazil production between 50 and 55 million bags. Support came from speculators, with index funds buying late in the day as they adjust allocations. The market could use some more demand, but offers are solid nd coffee is available. Brazil producers are offering less. However, good offers were noted from Central America. Differentials are not real strong, but the Coffee is offered. Good quality coffees are still seeing the most interest in Central America. Brazilian differentials have turned stronger in an effort to encourage sales, but offers are said to be good from Colombia and Peru. Ideas are that Arabica production is strong in Latin America, but Central America is reporting mixed results, with Honduras strong but other countries losing some production due to rains at harvest time. London has been stronger due to the high Robusta prices in Brazil and continued reports of little on offer from Indonesia and Vietnam.
Overnight News: Certified stocks are higher today and are about 1.265 million bags. The ICO composite price is now 137.87 ct/lb. Brazil will get periods of scattered showers this weekend. Temperatures should average near 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.
Chart Trends: Trends in New York are up with objectives of 153.00 March. Support is at 144.00, 141.00, and 139.00 March, and resistance is at 149.00, 153.00 and 155.00 March. Trends in London are mixed to up with objectives of 2160 and 2260 March. Support is at 2130, 2090, and 2050 March, and resistance is at 2170, 2190, and 2210 March.

SUGAR
General Comments: Futures closed mixed to higher, with New York a little higher and London mixed to lower. The market is still in a corrective phase.. Carry spreads remain weaker, but did find some stability yesterday. However, new demand news is once again harder to find. Indian production estimates have dropped due to the bad monsoon weather and there are now reports that mills are closing early because there is no cane to process. News wire reports that Thai crops might be smaller continue to circulate. Brazil producers are not selling and appear to be taking a wait and see attitude on their production potential. It remains dry in northeast Brazil and is turning drier again in parts of the center south region. Less than expected demand and the potential for improved production, mostly from Brazil, in the next few months are primary negative factors.
Overnight News: Brazil will get scattered showers. Temperatures should average normal.
Chart Trends: Trends in New York are mixed to up with objectives of 2650 March. Support is at 2020, 1980, and 1960 March, and resistance is at 2070, 2120, and 2140 March. Trends in London are mixed to up with no objectives. Support is at 531.00, 524.00, and 519.00 March, and resistance is at 545.00, 556.00, and 559.00 March.

COCOA
General Comments: Futures markets closed a little higher in recovery trading. Overall price action remains weak, but the recent contract lows have held so far. Trends are sideways on the daily charts, but the weakness could mean that new contract lows are coming. Traders are getting are indications of big supply and less demand amid wire reports of increasing supplies in warehouses all over West Africa. The commercials have been able to buy at much cheaper prices, but are reported to be mostly quiet now. Processors and manufacturers have plenty of Cocoa and products on hand. Ideas of bigger production in West Africa and reports of weaker cash market prices continue. Production estimates from West Africa have been high. Worries about demand persist, especially in Europe, the largest per capita consumer of Chocolate.
Overnight News: Mostly dry conditions 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 a little lower today at 2.953 million bags.
Chart Trends: Trends in New York are mixed to down with objectives of 2000 March. Support is at 2150, 2120, and 2090 March, with resistance at 2210, 2250, and 2300 March. Trends in London are mixed. Support is at 1750, 1720, and 1690 March, with resistance at 1810, 1850, and 1880 March.
Questions? Ask Jack Scoville today at 312-264-4322

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