Softs: Cotton higher as trade bought on new lows

Fire at Brazilian port sparks sugar

                                                                                                                                               

Chart Trends:  Trends in FCOJ are mixed to down with objectives of 116.00 and 107.00 November.  Support is at 115.00, 112.00, and 109.00 November, with resistance at 121.00, 122.50, and 125.00 November.

COFFEE 

General Comments: Futures were lower in all three markets.  Arabica futures moved lower as offers increased from origin.  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, but the Real moved higher against the Dollar and offers from that origin were less.  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.  Differentials were weaker yesterday.  Brazil markets appear mostly quiet.  Coffee is available in Central America, and offers were more animat3ed yesterday. 

Overnight News:  Certified stocks are unchanged today and are about 2.752 million bags.  LIFFE stocks are now 5,615 lots.  The ICO composite price is now 108.16 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 be mostly dry or get light showers.  Temperatures should average near to above normal.

Chart Trends:  Trends in New York are mixed.  Support is at 113.00, 111.00, and 108.00 December, and resistance is at 118.00, 119.00, and 121.00 December.  Trends in London are mixed.  Support is at 1600, 1570, and 1540 November, and resistance is at 1670, 1710, and 1730 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.

 SUGAR     

General Comments:  Futures were mixed as the Brazilian real fell against the US Dollar and as traders talked of Brazil harvest delays from recent rains. Scattered showers are now reported in production áreas of Brazil, but dry weather should return this weekend.  Heavier rains seen in the last few weeks could have hurt sugar yields, but yields could get a little better now with the return of drier weather.  India should still have more than enough production to allow for exports. However, a cyclone is entering the country last weekend and could hurt crops.  The Rupee has been working lower. There is talk of strong offers from Thailand, and Thai differentials are stable. Price action suggests that the rally is starting to stall, but nearby New York contracts could approach 1950 and strong resistance just above  that level before finding much new selling interest from producers.

Overnight News:  Brazil could see dry conditions with variable tempertures this weekend.  .    

Chart Trends: Trends in New York are mixed to up with objectives of 1940 and 1950 March.  Support is at 1860, 1845, and 1835 March, and resistance is at 1915, 1935, and 1950 March.  Trends in London are up with objectives of 511.00, 513.00, and 534.00 December.  Support is at 499.00, 493.00, and 487.00 December, and resistance is at 510.00, 515.00, and 517.00 December.

 COCOA         

General Comments:  Futures closed higher on fears of short production and signs of big demand.  The US and Asian grind data showed strong demand as did the European data released last week.  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 áreas.  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 enar 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 áreas could be dry.  Temperatures should average above normal.  Brazil will get scattered showers and near normal temperatures.  ICE certified stocks are lower today at 3.978 million bags.  The North American third quarter Cocoa grind was 131,974 tons, from 121,916 tons last year.  LIFFE stocks are 3,926 standard delivery units, 112 large delivery units, and 0 bulk delivery units.

Chart Trends:  Trends in New York are up with objectives of 2810 December.  Support is at 2730, 2690, and 2655 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.

 

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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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