Cotton rises as weather threatens quality and yield

COTTON (NYBOT:CTZ13)

General Comments: Futures closed higher on ideas of poor weather in parts of the Delta and Southeast. Traders also heard about monsoon rains in India that are slow to withdraw this year. The extra rains could really hurt quality there, and maybe yields. Worries about Chinese production are also heard after some big typhoons passed near important production areas. Some short covering was noted on ideas that the crop is less than expected in the US, in part due to the recent big rains. US crop conditions right now are generally good with moderate to warm temperatures and dry conditions in the forecast for Texas this week and dry weather in the forecast for the Delta and Southeast.

Overnight News: The Delta and Southeast will see mostly dry weather, but showers should develop on the Delta on Friday. Temperatures will average above normal. Texas will see dry weather until some showers appear at the end of the week. Temperatures will average above normal this week and below normal this weekend. The USDA spot price is now 83.41 ct/lb. ICE said that certified Cotton stocks are now 0.011 million bales, from 0.011 million yesterday.

Chart Trends: Trends in Cotton are up with objectives of 8940 and 9300 December. Support is at 85.80, 85.50, and 85.15 December, with resistance of 87.10, 87.85, and 89.40 December.

FCOJ (NYBOT:OJX13)

General Comments: Futures closed higher on new speculative buying to end the week. There was no fundamental news, and the buying seemed mostly chart related. There are still no real threats showing in the tropical Atlantic for Florida, and none in the forecast through at least the end of the week. Growing conditions in the state of Florida remain mostly good. Showers are reported and conditions are said to be very good in almost the entire state. Temperatures are warm. Brazil is seeing near to above normal temperatures and showers.

Overnight News: Florida weather forecasts call for some showers. Temperatures will average near normal.

Chart Trends: Trends in FCOJ are mixed.. Support is at 125.00, 124.00, and 122.50 November, with resistance at 131.00, 132.00, and 135.00 November.

COFFEE (NYBOT:KCZ13)

General Comments: Futures were lower again on speculative selling. Selling was tied to wire service stories highlighting the potential for very strong production in Vietnam this year. Some industry sources in Europe told the wires that production could be as high as 30 million bags. The Vietnamese government estimates production at 25 million bags, and other private sources in Vietnam have estimated production as high as 27 million bags. Rains are continuing in Brazil, which will promote good flowering for the next crop. No one is talking about big offers these days from Brazil, but everyone knows they had a big crop this past year and it will need to be moved. Coffee is available in Central America. New crop is now being offered and the last of the old crop is getting moved. Colombia is offering Coffee into the cash market as well. Current crop development is still good this year in most production areas of Latin America. Central America crop conditions are said to be good overall, but the rust is still a big problem. The weather is good, with frequent rains.

Overnight News: Certified stocks are lower today and are about 2.774 million bags. The ICO composite price is now 108.75 ct/lb. Brazil should get scattered showers. Temperatures will average near normal. Colombia should get scattered showers, and Central America and Mexico should get showers and rains. Northern Mexico should be mostly dry. Temperatures should average near to above normal.

Chart Trends: Trends in New York are mixed to down with objectives of 112.00, 111.00, and 106.00 December. Support is at 111.00, 108.00, and 105.00 December, and resistance is at 117.00, 119.00, and 121.00 December. Trends in London are down with objectives of 1580 November. Support is at 1600, 1570, and 1540 November, and resistance is at 1660, 1665, and 1690 November. Trends in Sao Paulo are mixed to down with objectives of 123.50 December. Support is at 135.00, 132.00, and 129.00 December, and resistance is at 140.00, 142.00, and 145.50 December.

SUGAR (NYBOT:SBV13)

General Comments: Futures were sharply lower on speculative and commercial selling tied to ideas of increased offers after the recent rally. Trends turned mixed with the price action on Friday. There is talk of increased offers from India and Thailand, and Thai differentials have been under some pressure in recent weeks. Doubts about Brazil production are still supporting the market overall. Private sources and CONAB have recently reduced Sugarcane and Sugar production estimates due to poor growing conditions earlier in the year, and UNICA will most likely do the same tomorrow. Brazil weather has been mostly good for harvesting lately as rains have been less. Some showers are reported now that will help support growth for the next crop but will delay harvesting of the current crop. Thailand expects more production this year, and is actively offering their supplies into the world market. India and Brazil are the same, so Sugar should be available at good prices for buyers.

Overnight News: Brazil could see scattered showers and moderate temperatures.

Chart Trends: Trends in New York are mixed to up with objectives of 1880 and 1980 March. Support is at 1750, 1735, and 1715 March, and resistance is at 1790, 1810, and 1825 March. Trends in London are mixed. Support is at 478.00, 476.50, and 472.00 December, and resistance is at 484.00, 488.00, and 490.00 December.

COCOA (NYBOT:CCZ13)

General Comments: Futures closed higher. The fundamentals are considered bullish, but chart action still shows that much of the fundamental news might be part of the price. Worries are that there will not be enough Cocoa beans available for processing for end of the year holiday demand. These worries became a media item last week in the US and Canada. Cocoa is between crops, and offers are light. Rains have returned to West Africa. Ideas are that crop conditions there are generally improving, but that already harvested beans can get moldy due in part to producer holding patterns and poor storage facilities. Ideas are that drought and hot temperatures seen earlier in the growing season has hurt bean size and yields. 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 normal. Malaysia and Indonesia should see scattered showers, but southern areas could be dry. Temperatures should average above normal. Brazil will get mostly dry conditions and warm temperatures. ICE certified stocks are lower today at 4.265 million bags.

Chart Trends: Trends in New York are mixed to up with objectives of 2720 December. Support is at 2610, 2580, and 2555 December, with resistance at 2650, 2680, and 2710 December. Trends in London are mixed. Support is at 1695, 1680, and 1670 December, with resistance at 1710, 1730, and 1750 December.

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.

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