Cotton falls as reports show weak exports

COTTON (NYBOT:CTZ13)

General Comments: Futures closed lower in quiet and range bound trading. Futures moved lower as bulls could not really take out resistance areas near the highs of the day in early trading. USDA showed weak export sales after the close for the end of September, and will catch up on other weekly reports this week. The lack of USDA reports has greatly reduced volume as traders did not know exactly what is going on, but traders should get a crop progress and condition report today and more reports on demand as the week moves on. Brazil conditions are reported to be very good in Bahia. US crop conditions right now are generally good in Texas. The Delta and Southeast are reporting generally favorable conditions as well. Trends are mostly down on the charts.

Overnight News: The Delta and Southeast will see dry weather. Temperatures will average near to below normal. Texas will see dry weather. Temperatures will average above normal. The USDA spot price is 79.44 ct/lb. today. ICE said that certified Cotton stocks are now 0.069 million bales, from 0.55 million yesterday. USDA said that net Upland Cotton export sales for the week ending September 26 were 64,900 bales this year and 0 bales next year. Net Pima bales were 53,000 bales this year and 0 bales next year.

Chart Trends: Trends in Cotton are mixed to down with no objectives. Support is at 82.90, 82.50, and 81.70 December, with resistance of 84.20, 85.50, and 85.80 December.

FCOJ (NYBOT:OJX13)

General Comments: Futures closed lower again as the weather stays tranquil in Florida and as demand appears to be poor. November bucked the trend to close higher on spread activity as speculators and producers roll shorts forward. 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. 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 week.

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 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 (NYBOT:KCZ13)

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 lower today and are about 2.748 million bags. The ICO composite price is now 108.09 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. Hurricane Raymond will drop some big rains over parts of central Mexico in the next couple of days. 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 (NYBOT:SBH14)

General Comments: Futures were sharply higher in reaction to the fire at Coopersucar warehouses in Santos port. The market moved above 20 cents a pound in early trading, only to settle later in the middle of the daily range. About 180,000 tons of Sugar was lost, but the bigger problem will be logistical snarls at ports as Coopersucar is a major exporter. Much of that export capacity is now gone for at least a few months. Dry weather is now reported in production areas of Brazil. 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 temperatures this weekend.

Chart Trends: Trends in New York are up with objectives of 2020 and 2175 March. Support is at 1915, 1905, and 1865 March, and resistance is at 1975, 2000, and 2015 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 (NYBOT:CCZ13)

General Comments: Futures closed lower on buy the rumor and sell the fact selling now that all the world grind demand data has been released. The US and Asian grind data showed strong demand as did the European data released a couple of weeks ago. The strong demand combined with ideas of short production this year 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 scattered showers and near normal temperatures. ICE certified stocks are lower today at 3.978 million bags.

Chart Trends: Trends in New York are mixed. Support is at 2690, 2570, and 2510 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

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