Cotton trends remain up as strong sales continue

COTTON

General Comments: Futures were lower as speculators sold long positions after the big rally on Thursday. Trends remain up as traders contemplate less planted area next year and strong export sales. Nearby months went down more than deferred months due to the liquidation trading. Bull spreads will be featured once again as the market tries to find some Cotton. Those looking for Cotton are having a tough time as supplies do not seem to be out there, or at least are not available to the market. Export sales have been strong for the last month to six weeks, and strong sales are expected to continue after another failed Chinese government auction held over the weekend. Buyers there said that the government wanted high prices for inferior Cotton and that they would continue to import even with higher taxes. The current low prices are bringing into question what farmers in Texas and the Delta and Southeast will plant this year. Some are wondering if planted area might be lower this year here in the US due to weak prices against competing crops. The area lost would go mostly to Corn and Soybeans. Current weather features some precipitation in Delta and Southeast areas, but western Texas was mostly dry. Delta areas will turn dry this week. Ideas are that the market can continue to work higher overall.

Overnight News: The Delta and Southeast will see mostly dry conditions, although a few showers are possible early this week. Temperatures will average near to above normal. Texas will get dry weather this week. Temperatures will average near to above normal. The USDA spot price is now 75.16 ct/lb. ICE said that certified Cotton stocks are now 0.112 million bales, from 0.110 million yesterday.

Chart Trends: Trends in Cotton are up with objectives of 9100 March. Support is at 80.40, 79.90, and 78.00 March, with resistance of 84.00, 85.25, and 87.00 March.

FCOJ

General Comments: Futures closed little changed in light volume trading. Weather remains good in Florida. Temperatures remain mild in the state, and conditions are mostly dry. Forecasts call for mostly dry conditions and mild temperatures to continue. Fruit is holding for now, and irrigation is being used by producers to hold crop condition. Harvest in Florida of mid and early oranges is continuing, and the Valencia harvest is underway. Demand for domestically produced Juice remains down from last year. Weather in Brazil is reported to be good. Brazil is seeing normal temperatures and scattered showers. Harvest is continuing, so an increase in supplies should be expected at this time of year.

Overnight News: Florida weather forecasts call for mostly dry conditions, but showers are likely on Wednesday. Temperatures will average above normal.

Chart Trends: Trends in FCOJ are mixed. Support is at 110.00, 109.00, and 106.00 March, with resistance at 118.00, 122.00, and 126.00 March.

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