Trends on coffee, sugar, cocoa and more

December 9, 2015 09:00 AM

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Cotton

General Comments:  Futures closed mixed after a quiet session as traders prepared for the USDA monthly supply and demand estimates that will be released later today. The weather for the rest of the harvest is good for the U.S. and demand for U.S. cotton remains strong. The strong demand should continue. World Cotton markets should find increased buying interest and a move to higher prices. Production in both India and Pakistan is less, with trade estimates in both countries looking for losses in excess of 30%. Pakistan has said that imports will  be more than 4 million bales, and Indian export projections are dropping. Southeast Asia remains a strong buyer and will most likely be the best overall buyer in the world markets. The U.S. will be the primary beneficiary as the supplies will be available. 

The U.S. has its own quality problems as the classings data continues to show that the percent of cotton tenderable to the market is less than normal. But the U.S. will be able to offer good quality cotton to all buyers even with the below average crop. The charts show that prices remain in the range that has existed for well over a year. It still appears that futures are trying to complete a long term low rather than preparing to start a new major leg down.    

Overnight News:  The Delta and the Southeast should see dry weather until some showers arrive in the Delta on Sunday. Temperatures should average near to above normal. Texas will see dry weather except for showers on Saturday. Temperatures will average near to above normal. The USDA spot price is 63.06 ct/lb. today. ICE said that certified cotton stocks are now 65,302 bales, from 65,302 bales yesterday. ICE said that 0 contracts were delivered against December futures today and that total deliveries for the month are now 235 contracts. 

Chart Trends:  Trends in Cotton are mixed to up with objectives of 6700 and 7000 March. Support is at 6390, 6360, and 6310 March, with resistance of 6490, 6520, and 6570 March.

FCOJ

General Comments:  Futures were a little lower in consolidation trading and as harvest conditions remained great in northern Florida and improved in the south. Southern Florida has been getting a lot of rain in the lst few days, but the front has passed and the state is drier and harvest can proceed. The demand inside the U.S. for FCOJ and orange juice of any type remains weaker as consumers have found alternatives. This has hurt the prices and therefore the efforts to replant trees affected by the greening disease. Dry areas of Florida got some very beneficial rains last week, interrupting the harvest but adding to soil moisture at a time when the rains were needed. World conditions are more stable as conditions are called good right now in Europe and Brazil.  Both production areas have seen good rains and moderate temperatures. The charts show that futures are near important support areas that should hold. The harvest will continue and supplies will increase and this should limit upside potential for now, but speculative buying interest will continue through the end of the year as some weather premium is added back to prices. It is freeze season and a traditional time for speculative buying.

Overnight News:  Florida weather forecasts call for mostly dry conditions. Brazil should see light showers over the second half of the week and near to above normal temperatures. 

Chart Trends:  Trends in FCOJ are mixed to down with objectives of 144.00 and 135.00 January. Support is at 140.00, 135.00, and 133.00 January, with resistance at 145.00, 150.00, and 154.00 January.

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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.