MORNING SOFTS COMMENTS

MORNING SOFTS COMMENTS

Jack Scoville

Thursday, July 16, 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 lower.  It was a demand market, and the demand for US Cotton has been poor.  It is not likely to get any better as the US has announced it will not start Phase 2 negotiations with the Chinese.  Signs of an improving economy in the US and around the world helped ideas of better Cotton demand.  The world is starting to slowly recover from the Coronavirus scare and some stores are starting to open again after being closed for weeks or months.  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 isolated 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 58.30 ct/lb.  ICE said that certified stocks are now 20,674 bales, from 25,582 bales yesterday.  ICE said that 0 notices were posted for delivery against July futures and that total deliveries for the month are now 436 contracts.  USDA said that net Upland Cotton export sales were -17,500 bales this year and 29,100 bales next year.  Net Pima sales were 5,800 bales this year and 0 bales next year.       

Chart Trends:  Trends in Cotton are mixed to down with objectives of 6000 and 5760 December.  Support is at 6110, 6090, and 5930 December, with resistance of 6320, 6370 and 6490 December.

FCOJ

General Comments:  FCOJ was a little lower.  Florida production is now estimated at 67 million boxes, unchanged from last month.  The Florida Movement and Pack report showed slightly lower ending stocks for the month.  California and US production was increased.  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.  The tree condition is called good.  The Valencia harvest is over.  Brazil has been dry and irrigation has been used.  The harvest is increasingly active in Brazil. 

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 mixed to up with no objectives.  Support is at 123.00, 121.00, and 118.00 September, with resistance at 128.00, 131.00, and 132.00 September.

COFFEE 

General Comments:  Futures were lower in New York and higher in London.  London broke out to the upside on the daily charts.  The Real in Brazil is now very cheap against the US Dollar and other major currencies.  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.   

Overnight News:  ICE certified stocks are higher today at 1.623 million bags.  GCA stocks are now 7.061 million bags, from 6.724 million last month.  The ICO daily average price is now 98.90 ct/lb.  Brazil will get dry conditions or isolated showers 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 up with objectives of 1250 and 1300 September.   Support is at 1210, 1180, and 1150 September, and resistance is at 1230, 1260, and 1300 September[JS2] .

SUGAR               

General Comments:  New York and London closed higher as the August expiration in London comes close at hand.  There is still an active export program from Brazil, but not really from India or Thailand.  Getting the Sugar moved is becoming more difficult with the widespread Coronavirus outbreak in both Brazil and India.  Brazil mills have shifted 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. 

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

Chart Trends: Trends in New York are mixed to down with objectives of 1120 and 1050 October.  Support is at 1150, 1120, and 1100 October, and resistance is at 1200, 1230, and 1240 October.  Trends in London are mixed.  Support is at 337.00, 332.00, and 330.00 October, and resistance is at 356.00, 360.00, and 366.00 October.

COCOA              

General Comments:  New York and London closed lower.  Ideas of ample supplies amid deteriorating grind rates hurt the market..  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 lower today at 4.086 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 mixed.  Support is at 2090, 2060, and 2030 September, with resistance at 2200, 2220, and 2310 September.  Trends in London are down with objectives of 1460 September.  Support is at 1510, 1480, and 1450 September, with resistance at 1560, 1600, and 1660 September.

DJ European Cocoa Processing Slumps Amid Lockdowns

  By David Hodari  

  European processing volumes of raw cocoa beans slumped by 8.9% in the second quarter of the year due to the global economic torpor, travel bans and lockdowns brought by the coronavirus pandemic, according to data released Thursday by the European Cocoa Association.

  Cocoa grindings–the amount of raw cocoa processed into butter and powder for making confectionery and chocolate–plunged 30,782 metric tons to 314,108 metric tons.

  That’s down from 344,890 tons in the same quarter last year, to mark the weakest second quarter grindings since 2015 and the biggest percentage drop since the 2011/2012 growing season.

  Grindings are seen by market participants as a proxy for demand. The ECA bases its estimates on data from 21 companies, including Cargill Cocoa & Chocolate Inc., Ferrero SpA, Nestle SA and Mondelez International Inc.

  Investors will be watching for North American figures, due out in the coming weeks.

  London cocoa futures were last down 0.1% at $1,551 a metric ton.

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