Cotton falls as buyers see good weather for U.S. crops

COTTON

General Comments: Futures were lower again on demand concerns and ideas of good weather for U.S. crops. Speculators were said to be the best sellers and were said to be liquidating long positions. Traders are worried about Chinese demand as the economy there shows signs of slowing down. U.S. economic data has been improving, implying that demand might be so bad at home. But, the biggest demand for U.S. cotton right now comes from China. The weather has improved in all areas with some precipitation in Texas areas and drier weather in the forecast for the next few days for the Delta and Southeast. Dry weather is forecast for the Delta and Southeast, and warm weather is expected in Texas this week. Ideas are that farmers can get a lot of planting done with dry and warm conditions.

Overnight News: The Delta and Southeast will see dry conditions or afternoon showers, with best rain chances over the weekend. Temperatures will average near to above normal. Texas will get showers through the weekend, mostly in eastern areas. Temperatures will average mostly above normal. The USDA spot price is now 75.01 ct/lb. ICE said that certified Cotton stocks are now 0.517 million bales, from 0.513 million yesterday.

Chart Trends: Trends in Cotton are down with no objectives. Support is at 79.00, 78.10, and 77.10 July, with resistance of 81.35, 81.75, and 81.90 July.

FCOJ

General Comments: Futures closed lower on what appeared to be some producer selling and speculative long liquidation before the weekend and end of the month.. Trends are mixed after the move on Friday. Traders are wrestling with more reports of losses from greening disease on the one side and beneficial rains that have hit the state on the other. Greening disease and what it might mean to production prospects continues to be a primary support item and will be for several years. Irrigation is still in use in a few areas. Temperatures are warm in the state. The Valencia harvest is continuing. Brazil is seeing near to above normal temperatures and dry weather, but some showers are possible late this week.

Overnight News: Florida weather forecasts call for scattered afternoon showers through the week. Temperatures will average near to above normal this week and near normal this weekend.

Chart Trends: Trends in FCOJ are mixed to up with objectives of 160.00 and 177.00 July. Support is at 148.00, 145.00, and 144.00 July, with resistance at 156.00, 159.00, and 162.00 July.

Next page: Coffee, Sugar and Cocoa

COFFEE

General Comments: Futures were higher on speculative short covering at the end of the week and end of the month. Speculators remain most bearish. There is talk of increasing offers of Robusta from producers as they apparently did not sell when prices were much higher. Most sellers, including Brazil, are quiet and waiting for differentials or futures to get stronger. Buyers are waiting for prices to drop even more, but need coffee and will buy if the differentials offered are good. Brazil weather is forecast to show some showers for this week, but no cold weather. Trends are down due to the expected large production in Brazil. It is speculators who keep pushing the futures lower as they anticipate ever increasing supplies. Current crop development is still good this year in Brazil, but it has been dry. Central America crops are too dry for good new crop flowering. Colombia is reported to have good conditions.

Overnight News: Certified stocks are lower today and are about 2.756 million bags. The ICO composite price is now 121.26 ct/lb. Brazil should get showers. Temperatures will average near to above normal. Colombia should get scattered showers, and Central America and Mexico should get mostly dry conditions away from some showers in Eastern Mexico and northern Central America. Temperatures should average near to above normal. The ICO said that world Coffee exports were 9.60 million bags in April and now total 65.98 million bags.

Chart Trends: Trends in New York are mixed to down with objectives of 116.00 July. Support is at 125.00, 122.00, and 119.00 July, and resistance is at 128.00, 133.00, and 135.00 July. Trends in London are mixed to down with no objectives. Support is at 1870, 1855, and 1830 July, and resistance is at 1895, 1920, and 1930 July. Trends in Sao Paulo are down with no objectives. Support is at 153.00, 150.00, and 147.00 September, and resistance is at 161.50, 166.00, and 170.00 September.

SUGAR  

General Comments: Futures closed lower on Brazil currency weakness. The price action overall remains weak and implies that further losses are coming down the road due to coming Brazil supplies. However, the market is trying to find some support as demand has surfaced. There were some reports of shipments getting booked ahead of the Ramadan holiday to give some demand to the market. Traders remain bearish on ideas of big supplies, especially from Brazil. Traders in Brazil expect big production as the weather is good. Demand is said to be strong from North Africa and the Middle East as buyers get stocks in hand for Ramadan in July.

Overnight News: Showers are expected in Brazil. Temperatures should average near to above normal.

Chart Trends: Trends in New York are down with objectives of 1620, 1610, and 1600 July. Support is at 1650, 1620, and 1600 July, and resistance is at 1675, 1700, and 1720 July. Trends in London are mixed. Support is at 474.00, 470.00, and 467.00 August, and resistance is at 481.00, 487.00, and 491.00 August.

COCOA  

General Comments: Futures closed lower, and trends remain down on good weather in Africa and weak demand ideas. Ideas are that processors are not active in the market right now and are hoping for lower prices before buying again. Some processors have large stocks to work down as well as many bought early due to the new marketing program in Ivory Coast. The weather is good in West Africa, with more moderate temperatures and some rains. The mid-crop harvest is moving to completion, and less than expected production along with smaller beans is reported. Malaysia and Indonesia crops appear to be in good condition and weather is called favorable.

Overnight News: Scattered showers are expected in West Africa. Temperatures will average near to above normal. Malaysia and Indonesia should see episodes of isolated showers. Temperatures should average near normal. Brazil will get mostly dry conditions and warm temperatures. ICE certified stocks are lower today at 4.987 million bags.

Chart Trends: Trends in New York are mixed to down with objectives of 2170 July. Support is at 2185, 2170, and 2155 July, with resistance at 2230, 2250, and 2275 July. Trends in London are down with objectives of 1405 July. Support is at 1490, 1470, and 1455 July, with resistance at 1515, 1520, and 1535 July.

About the Author
Jack Scoville

Jack Scoville is a veteran futures market analyst specializing in grains, softs, rice, oilseeds, and tropical products such as coffee and sugar. His industry contacts in South America, Europe, Asia, and North America provide him with a unique and comprehensive view of these markets. Jack began working in the futures industry over 30 years ago and spent 10 years working on the floor of the Chicago Board of Trade in various roles, starting with The PRICE Futures Group since it was established in 1988. Jack writes daily commentaries - Morning Grains and Softs, in both English and Spanish and is regularly quoted around the world by news & wire services including Dow Jones, AP, Bloomberg, and Reuters. You can contact Jack by phone at (312) 264-4322 or by email at jscoville@pricegroup.com. Learn even more on our website at www.pricegroup.com.

Futures and options trading involves substantial risk of loss and may not be suitable for everyone. The information presented by The PRICE Futures Group is from sources believed to be reliable and all information reported is subject to change without notice.

Comments
comments powered by Disqus
Check out Futures Magazine - Polls on LockerDome on LockerDome