Where are softs headed?

Softs update

COTTON(NYBOT:CTK14)

Cotton Futures closed higher in sympathy with strong prices in Chicago and as the charts showed the possibility that a short term low had been made. Demand for export has turned soft on the export side, but domestic demand has been strong. The weak demand might continue as China has big supplies already and on the falling Chinese currency in recent weeks.  USDA projects tight ending stocks at the end of the current marketing year, and the cash market has been strong due to very limited offers. Brazil conditions are reported to be good in Bahia with warm temperatures, but the state needs rain and should get more this week and over the weekend. 

Overnight News

Delta and Southeast áreas will get precipitation over the weekend. Temperatures will average near to below normal.  Texas will see dry weather. Temperatures will average near to below normal.  The USDA spot price is 84.16 ct/lb. today. ICE said that certified Cotton stocks are now 0.259 million bales, from 0.259 million yesterday. 

Chart Trends

Trends in Cotton are mixed to up with objectgives of 90.00, 91.40, and 92.00 May. Support is at 88.00, 86.10, and 85.40 May, with resistance of 89.60, 90.40, and 91.00 May.

 

FCOJ(NYBOT:OJK14)

Futures closed higher and made new highs for the move as the weather stays good in Florida and the chances to freeze trees becomes less.  But, the Greening Disease is working hard to keep overall production down.  The dissease will affect produc tion for several more years.  Brazil has seen weather might that be stressing trees as reports indicate that many áreas still need rain.  Showrs are expected to continue in Brazil production áreas through the weekend.  More rain would be beneficial in Florida, but harvest conditions remain good.  Harvest is starting to come to a close for early and mid Oranges.  The Valencia harvest is expanding as the early harvest winds down.  Blooms are being reported in South Florida.

Overnight News

Florida weather forecasts call for mostly dry conditions today, showers on Thursday, then dry weather again.  Temperatures will average near to above normal.                                                                           

Chart Trends

Trends in FCOJ are up with objectives of 161.00 May.  Support is at 150.00, 148.00, and 144.00 May, with resistance at 156.00, 159.00, and 162.00 May.

 

COFFEE (NYBOT:KCK14)

Coffee Coffee Futures closed lower on what appeared to be speculative selling after a dramatic rally that pushed prices from just over $1.00 per pound to close to $2.00 per pound in a matter of weeks. Brazil is still on Carnaval for today, and other producers in other countries are not actively selling. Selling could pick up again tomorrow as offices reopen. Light rains are forecast through the weekend in Brazil but it is unclear if the showers will do much good.  Trends are up in all three markets. The main focus of the market is still on Brazil. The lack of rain in Coffee producing áreas over the last month has hurt Coffee production potential as the crop was forming cherries. Traders also keep waiting for more Coffee to appear from Vietnam.  Exports so far this year from Vietnam have been disappointing, although February exports were above the year ago pace.  Wire reports suggest that offers from Vietnam have been better to start this month as well. The market needs that Coffee to be exported to help fill the vacuum left by the poor production in Brazil.

Overnight News

Certified stocks are lower today and are about 2.600 million bags. The ICO composite price is now 161.53 ct/lb. Brazil will get showers. Temperatures will average near to below normal. Colombia should get scattered showers, and Central America and Mexico should get mostly dry weather, although some showers are expected in Eastern Mexico.  Temperatures should average near to above normal. 

Chart Trends

Trends in New York are up with objectives of 204.00 May. Support is at 184.00, 180.00, and 177.00 May, and resistance is at 198.00, 201.00 and 204.00 May. Trends in London are up with objectives of 2150 and 2260 May. Support is at 2070, 2020, and 1990 May, and resistance is at 2140, 2165, and 2185 May. Trends in Sao Paulo are up with no objectives.  Support is at 207.50, 204.00, and 198.00 May, and resistance is at 212.00, 215.00, and 218.00 May.

 

SUGAR(NYBOT:SBK14)          

Futures were a little lower in consolidation trading. Brazil is still on Carnaval today and not offering, but that could change as work will start again tomorrow. Weather has improved in Sugar áreas as some showers were seen this week and could continue into the weekend.  Rains now could help the crop recoup some of the losses if there is enough rain. Charts show that short term trends are mixed as the market is in a consolidation phase after the recent rally. Thai Raw Sugar differentials are steady. Weather conditions in key production áreas around the world are rated as mostly good except for the dry weather in Brazil. Traders are watching Ukraine and Russia as both are important Sugarbeet producers, although this production stays at home. Any losses in either country could increase world demand. The situation has calmed down a bit now.

Overnight News

Brazil could see showers and storms and near to above normal tempertures. 

Chart Trends

Trends in New York are mixed.  Support is at 1730, 1700, and 1685 May, and resistance is at 1810, 1825, and 1845 May.  Trends in London are mixed.  Support is at 470.00, 464.00, and 462.50 May, and resistance is at 485.00, 488.00, and 493.00 May.

 

COCOA(NYBOT:CCK14)        

Futures closed higher in range trading. There is still not a lot of demand news around, but the demand has been solid and the main West Africa harvest is about over. Nigeria said its main crop harvest has come to an end in southern áreas, and other countries will start to wrap up very soon. Butter ratios remain strong on ideas of short supplies of Cocoa Butter in Europe and North America. Demand is strong, and processors they are looking at expanding capacity at an industry meeting in Florida this week. Asian demand has been strong and Indonesia is importing beans for processing. A very good midcrop production is possible from Africa, but producers say more rain is needed, especially in central and northern areas. Some showers are reported in southern áreas that will help. 

Overnight News

Mostly dry expected in West Africa, but a few showers are expected in southern áreas. Temperatures will average near to above normal. Malaysia and Indonesia should see scattered showers. Temperatures should average near to above normal. Brazil will get dry conditions or light showers and near to above normal temperatures. ICE certified stocks are lower today at 4.121 million bags. 

Chart Trends

Trends in New York are mixed. Support is at 2890, 2875, and 2830 May, with resistance at 2980, 3000, and 3020 May.  Trends in London are mixed. Support is at 1800, 1780, and 1765 May, with resistance at 1870, 1900, and 1930 May.

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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