FCOJ (NYBOT:OJX13)
General Comments: Futures closed lower again as the weather stays tranquil in Florida and as demand appears to be poor. The Nielsen data released at the beginning of the week highlighted the poor demand. There will be less production this year due to greening disease and some unfavorable weather earlier in the year, but has no reason to rally as demand remains mostly on the weak side and there have been no tropical systems to hit the state. Production will be down due to the greening disease and some drought stress early in the year, but these losses are mostly factored into the price. Growing conditions in the state of Florida remain mostly good. Dry weather has returned 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. It should be drier this weekend.
Overnight News: Florida weather forecasts call for mostly dry conditions. Temperatures will average near to above normal.
Chart Trends: Trends in FCOJ are mixed to down with objectives of 121.00, 117.00, and 107.00 November. Support is at 121.00, 118.00, and 115.00 November, with resistance at 125.00, 127.50, and 130.00 November.
COFFEE (NYBOT:KCZ13)
General Comments: Futures were lower in all three markets. Arabica futures moved lower even with a stronger Brazilian Real. London remained under pressure as the storms have come and gone in Vietnam. Traders there are waiting for Vietnam to harvest and sell, but that is still a few weeks away. The harvest has been delayed due to rains throughout the country over the last couple of weeks. Traders expect more downward pressure on prices once the harvest starts to hit the market. Brazil is thought to have a lot of Coffee to sell yet, and producers there have now sold about half of the crop. Colombia and Peru are actively selling. Producers all over the world are worried about the low prices and are trying to hold back on offers, but differentials and futures prices remain very low. Brazil markets appear mostly quiet. Coffee is available in Central America, but the market there seems quiet.
Overnight News: Certified stocks are unchanged today and are about 2.752 million bags. The ICO composite price is now 109.18 ct/lb. Brazil should get scattered showers. Temperatures will average near to above 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. Support is at 115.00, 113.00, and 111.00 December, and resistance is at 118.00, 119.00, and 121.00 December. Trends in London are mixed. Support is at 1640, 1600, and 1570 November, and resistance is at 1710, 1730, and 1750 November. Trends in Sao Paulo are mixed. Support is at 138.00, 135.00, and 132.00 December, and resistance is at 142.00, 143.00, and 145.00 December.
COCOA (NYBOT:CCZ13)
General Comments: Futures closed higher as fears of short production returned. Olam talked to the press yesterday and highlighted what they say is a production deficit of over 150,000 tons this year and a 185,000 tons deficit for next year. The company cites strong demand for the yearly production against demand deficits. Ghana cut its production estimate for this year to 830,000 tons, from 850,000 tons before, due to some poor weather during the growing season. Traders expect strong grind data from the US once the data is released. The strong demand combined with ideas of short production this year was more than enough to keep the rally going yesterday and should be enough to keep prices strong for at least the near term. Production in West Africa suffered this year due to drought in production areas. Rains are fine now, but are expected to be above average for the last half of the month. More than normal rains could impede harvest progress and hurt bean quality. The quality could be hurt as most farmers do not have good storage facilities. However, a strong rally now might encourage farmers to sell, and that would help with the quality as the beans would move to better facilities near the ports. Malaysia and Indonesia weather is favorable with scattered showers.
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 3.994 million bags. The Asian third quarter Cocoa grind was 161,097 tons, from 143,659 tons last year.
Chart Trends: Trends in New York are mixed to up with objectives of 2810 December. Support is at 2690, 2655, and 2645 December, with resistance at 2770, 2800, and 2830 December. Trends in London are mixed to up with objectives of 1840 December. Support is at 1745, 1730, and 1715 December, with resistance at 1810, 1840, and 1870 December.
About the Author
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.
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