Cotton rises on expected production falloff

COTTON (NYBOT:CTH14)

General Comments: Futures closed higher on ideas that good demand can continue and on speculation that the USDA will show less production in its annual reports next week. Demand has held together better than expected by many analysts given the recent price rally. The U.S. economy is improving slowly and should support increases in demand over time as people start to buy clothes again. Traders think USDA can show reduced production this year and perhaps reduced planted area potential for the coming year in the reports this month. Reduced production from the crop last year is very possible given that USDA showed good yields in the production reports this fall despite some very stressful weather seen over the summer in Texas and over to the Southeast. Brazil conditions are reported to be very good in Bahia.

Overnight News: The Delta will see dry conditions and Southeast should see showers today and Sunday. Temperatures will average near to below normal today and tomorrow, then above normal. Texas will see dry conditions. Temperatures will average near to above normal. The USDA spot price is 81.28 ct/lb. today. ICE said that certified Cotton stocks are now 0.034 million bales, from 0.035 million yesterday.

Chart Trends: Trends in Cotton are mixed to up with objectives of 85.80, 86.90, and 88.20 March. Support is at 83.80, 83.00, and 82.50 March, with resistance of 85.30, 85.50, and 86.00 March.

FCOJ (NYBOT:OJH14)

General Comments: Futures closed lower as the freeze season moved into full swing. Selling was noted in January as that month gets ready for deliveries to start on Thursday. Florida remains warm and dry, although some rain is in the forecast for the weekend from the same system that brought snow to the Midwest on New Year’s Day. There does not seem to be anything going on with the weather systems to expect any dangers to the crop for the short term, even with some very cold weather to the north of the country in the forecast for next week. Northern parts of the U.S. could see some of the coldest temperatures in years next week. The greening disease has affected crops in a big way and could cause reduced production for the next few years. Growing and harvest conditions in the state of Florida remain mostly good. Irrigation water is available and is being used. Harvest is very active, but fruit sizes are reported to be small. Brazil is seeing near normal temperatures and scattered showers.

Overnight News: Florida weather forecasts call for mostly dry conditions, but rain is expected today. Temperatures will average mostly above normal.                                                                                                                                 

Chart Trends: Trends in FCOJ are mixed. Support is at 137.50, 135.50, and 135.00 March, with resistance at 142.00, 144.00, and 145.00 March.

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