MORNING SOFTS COMMENTS

MORNING SOFTS COMMENTS 

Jack Scoville 

Friday, August 14, 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 higher as FSA/USDA showed less than expected planted area in its certified acres reports yesterday.  The data is very incomplete and acres are likely to rise, but the market took the reports at face value and rallied.  USDA showed higher than expected yields and production estimates to go along with reduced harvested area.  Ending stocks were higher than expected and higher than last month.  West Texas weather remains detrimental for crop development.  The weekly export sales report was bad once again.  Export demand for US Cotton has been poor for the last few weeks.  The world is starting to slowly recover from the Coronavirus scare and some stores are starting to open again after being closed for weeks.  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 above normal.  The USDA average price is now 57.57 ct/lb.  ICE said that certified stocks are now 6,481 bales, from 6,485 bales yesterday.             

Chart Trends:  Trends in Cotton are mixed.  Support is at 6300, 6180, and 6060 December, with resistance of 6400, 6430 and 6500 December. 

FCOJ 

General Comments:  FCOJ was much higher in recovery trading.  Trends are mixed on the daily charts.  The Coronavirus is still around and is still promoting the consumption of FCOJ at home.  There are hopes that Russia has found a vaccine, but no one knows for sure if it is safe and effective.  A weaker US Dollar hurt import potential even more than before.  But, restaurant and food service demand has been much less as no one is really dining out.  Florida production prospects for the new crop were hurt by an extended flowering period, but the weather is good now with frequent showers to promote good tree health and fruit formation.  Import demand to the US should be minimal as US prices remain below those of Europe.  Brazil has been too dry and irrigation is being used. 

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.   

Chart Trends:  Trends in FCOJ are mixed.  Support is at 118.00, 117.00, and 114.00 September, with resistance at 124.00, 126.00, and 128.00 September. 

COFFEE   

General Comments:  Futures were sharply higher in both markets yesterday.  A weaker US Dollar and hopes that Russia had a vaccine for the Coronavirus that could restore demand were reasons for the market to rally.  Demand has generally been weaker  The US CPI indicated that inflation could be developing.  Vietnam was dry during flowering time and is dry again.  Production ideas are lower.  Vietnam is also reported to be having problems with shipping due to lockdowns from the Coronavirus.  Demand overall remains down with the US still locking down due to the Coronavirus resurgence in some states.  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.  Reports indicate that consumers at home are consuming blends with more Robusta and less Arabica.  Europe is emerging from lockdowns, but the Coronavirus has ramped up as the lockdowns are eased and that bas hurt overall economic activity there.  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 and ports are operating normally.  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.     

Overnight News:  ICE certified stocks are lower today at 1.391 million bags.  The ICO daily average price is now 113.81 ct/lb.  Brazil will get mostly dry conditions with near to below normal temperatures.  Vietnam will see light to moderate showers.    

Chart Trends:  Trends in New York are mixed.  Support is at 112.00, 110.00, and 109.00 September, and resistance is at 117.00, 121.00 and 127.00 September.  Trends in London are mixed to up with objectives of 1500 and 1560 September.   Support is at 1440, 1370, and 1350 September, and resistance is at 1460, 1480, and 1500 September[JS1] . 

SUGAR                 

General Comments:  New York and London closed higher in range trading.  A potential vaccine for Coronavirus designed in Russia gave hopes for improved demand potential down the road.  The daily charts show that Sugar is back in the recent trading range and is in the upper end of that range.  Ideas are that there is plenty of Sugar for the world market.  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 have less this year due to reduced planted area and erratic rains during the monsoon season.  There are reduced flows from rivers from China to hinder irrigation of the crops.   

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

Chart Trends: Trends in New York are mixed to up with objectives of 1330, 1350, and 1370 October.  Support is at 1300, 1270, and 1250 October, and resistance is at 1310, 1330, and 1380 October.  Trends in London are mixed to up with objectives of 394.00, 401.00, and 412.00 October.  Support is at 375.00, 372.00, and 368.00 October, and resistance is at 382.00, 384.00, and 386.00 October. 

COCOA                

General Comments:  New York closed mostly a little higher and London closed mostly a little lower in currency related trading.  The US Dollar was weaker yesterday and has generally been weaker.  The weaker US Dollar has allowed New York to rally as has the news that the West African harvest is now about over.  That means less selling pressure from origin.  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 still trying to open its markets again but the Coronavirus is still around and consumers are reluctant to buy.  Harvest is now over for the main crop in West Africa and the results are very good.  The reports from West Africa imply that a big harvest in the region.  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 3.916 million bags.       

Overnight News: 

Chart Trends:  Trends in New York are mixed to down with objectives of 2380 and 2290 September.  Support is at 2430, 2390, and 2330 September, with resistance at 2510, 2560, and 2570 September.  Trends in London are mixed.  Support is at 1660, 1620, and 1580 September, with resistance at 1700, 1720, and 1770 September. 

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