MORNING SOFTS COMMENTS

MORNING SOFTS COMMENTS

Jack Scoville

Friday, July 10, 2020

Price Futures Group, CBOT

Chicago, IL

(312) 264-4322

jscoville@pricegroup.com

JSL, SA de CV

San Salvador, El Salvador (503) 2260-7806jslsadecv@comcast.net

JSL, SA

jslsa@comcast.net

COTTON            

General Comments   Cotton closed a little lower in consolidation trading.  The weekly export sales report was poor.  The world is starting to slowly recover from the Coronavirus scare and some stores are starting to open again after being closed for weeks.  However, economic improvement in the US was thrown into doubt as Coronavirus cases surged higher in states that had reopened.  The retail demand has been slow to develop as many consumers got hurt economically due to stay at home orders during the height of the pandemic and have little disposable funds to spend on clothes.  Demand will slowly improve but the industry should have plenty of supplies to work with in the short term.  The US weather situation is mixed, with good rains noted in the Southeast and good conditions in the Midsouth.  However, it has been very hot and dry in West Texas and crops there are suffering.

Overnight News:  The Delta will get isolated showers and Southeast will get scattered showers.  Temperatures should be near to above normal.  Texas will have isolated showers.  Temperatures will average near to above normal.  The USDA average price is now 59.60 ct/lb.  ICE said that certified stocks are now 38,149 bales, from 37,261 bales yesterday.  ICE said that 41 notices were posted for delivery against July futures and that total deliveries for the month are now 420 contracts.       

Chart Trends:  Trends in Cotton are up with no objectives.  Support is at 6340, 6250, and 6110 December, with resistance of 6510, 6580 and 6680 December.

FCOJ

General Comments:  FCOJ was a little higher.  Support is coming from the continued effects from the Coronavirus that are keeping people at home and drinking Orange Juice.  Demand from grocery stores has remained strong in response to the increased consumer demand.  Inventories in cold storage remain solid so there will be FCOJ to meet the demand.  There is increasing concern about the food service demand not improving even with the partial opening of the states.  The weather in Florida [JS1] is currently good for the crops.  Southern areas are cooler and have seen more frequent showers.  The tree condition is called good.  The Valencia harvest is almost over.  Brazil has been dry and irrigation has been used.  The harvest there is starting 

Overnight News:  Florida should get isolated showers.  Temperatures will average near to above normal.   Brazil should get dry conditions and near to below normal temperatures.  ICE said that 0 notices were posted for delivery against July futures and that total deliveries for the month are now 0 contracts.    

Chart Trends:  Trends in FCOJ are up with no objectives.  Support is at 125.00, 123.00, and 121.00 September, with resistance at 129.00, 132.00, and 135.00 September.

COFFEE 

General Comments:  Futures were mixed and little changed once again yesterday.  Trends are still sideways in both markets.  The Coronavirus has returned to the US to kill demand hopes.  Europe is in much better shape battling the virus.  The Brazil harvest is active but shipping and collection have become very difficult due to the widespread outbreak of the Coronavirus there.  Even so, the pickers are showing up for work.  Ideas are that production will be very strong this year as it is the on year for the trees.  The strong production ideas are coming despite hot and dry weather seen in the country at flowering time.  Vietnam also had hot and dry weather at flowering time and production ideas there are less than original expectations of a bumper crop.  The demand from coffee shops and other food service operations is still at very low levels.  Consumers are still drinking Coffee at home and the return of the Coronavirus outbreak will keep things that way.  The logistics of moving Coffee from Central and South America remain difficult.  Shipping logistics have improved somewhat, but many are still having trouble getting the Coffee to ports to move to consumer nations. 

Overnight News:  ICE certified stocks are higher today at 1.637 million bags.  The ICO daily average price is now 99.27 ct/lb.  Brazil will get dry conditions with near to above normal temperatures.  Vietnam will see light to moderate showers.  ICE said that 0 contracts were delivered against ICE July futures contracts and that total deliveries for the month are now 1,303 contracts.   

Chart Trends:  Trends in New York are mixed.  Support is at 97.00, 95.00, and 92.00 September, and resistance is at 103.00, 105.00 and 106.00 September.  Trends in London are mixed.   Support is at 1150, 1140, and 1120 September, and resistance is at 1230, 1240, and 1260 September[JS2] .

SUGAR               

General Comments:  New York and London closed lower on reports of an active Brazil shipping program for Sugar.  Ideas are that there is plenty of Sugar for the world market, but getting the Sugar moved is becoming more difficult with the widespread Coronavirus outbreak in both Brazil and India.  Brazil mills bave shifter part of the crush to Sugar production due to less ethanol demand.  India is thought to have a very big crop of Sugarcane this year but getting it into Sugar and into export position has become extremely difficult due to Coronavirus lockdowns.  Thailand might also have less this year due to reduced planted area and erratic rains during the monsoon season.  There are reduced flows from rivers from China as well. 

Overnight News:  Brazil will get dry conditions.  Temperatures should average near normal.  

Chart Trends: Trends in New York are mixed.  Support is at 1170, 1140, and 1120 October, and resistance is at 1230, 1240, and 1260 October.  Trends in London are mixed.  Support is at 344.00, 338.00, and 335.00 October, and resistance is at 360.00, 366.00, and 370.00 October.

DJ Brazil Sugar Crush Down 7.7% in 2H June as Ethanol Demand Fell

  By Jeffrey T. Lewis  

  SAO PAULO–Brazilian sugar mills in the country’s center-south region crushed less cane in the second half of June compared with a year earlier, as demand for ethanol remained low because of the coronavirus pandemic.

  Center-south mills crushed 42.9 million metric tons of cane in the period, a decrease of 7.7% from the same period a year earlier, according to industry group Unica. They produced 2.7 million tons of sugar, up 23.3%, and made 2 billion liters of ethanol, a decline of 17.1%.

  The production mix for the period was 47.4% sugar to 52.6% ethanol, compared with 37.1% sugar and 62.9% ethanol a year earlier.

  Economic activity fell sharply since March because of social distancing measures spurred by coronavirus, though some states and towns began permitting certain businesses to re-open in June. Ethanol sales by the mills in the center south in June were down 11.4% from the same period a year ago, Unica said.

  In the season from April 1 through July 1, mills in the region crushed 229.4 million tons of cane, up 5.2% from the same period a year earlier. Sugar production rose 48.8% to 13.3 million tons, and ethanol output fell 6.6% to 10 billion liters.

  The production mix for the season through July 1 was 46.4% sugar to 53.6% ethanol, compared with 34.7% sugar and 65.3% ethanol a year earlier.

COCOA              

General Comments:  New York and London closed a little higher in recovery trading.  There are a lot of demand worries as the Coronavirus is not going away and could be making a comeback in the US.  Europe is in much better shape in battling the virus.  Harvest is now over for the main crop in West Africa and the results so far are very good.  The reports from West Africa imply that a big harvest in the region.  However, the Midcrop could be less due to dry weather earlier in the season.  Arrivals are on a pace about the same as last year.  Ideas are that Southeast Asia also has good crops.

Overnight News:  Isolated to scattered showers are forecast for West Africa.  Temperatures will be near 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 higher today at 4.103 million bags.  ICE said that 0 delivery notices were posted against July contracts and that total deliveries for the month are now 441 contracts.    

Overnight News:

Chart Trends:  Trends in New York are down with no objectives.  Support is at 2090, 2060, and 2030 September, with resistance at 2160, 2180, and 2220 September.  Trends in London are down with objectives of 1460 September.  Support is at 1540, 1510, and 1480 September, with resistance at 1570, 1600, and 1660 September.

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