Is the demand for cotton seriously underestimated?

November 27, 2017 01:14 PM

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Coffee 

General Comments: Futures were higher in New York and lower in London. A weaker U.S. dollar gave support to futures in New York, but only helped keep losses to a mínimum in London as the market expects an increase in offers from Vietnam in the short term. Many Arabica traders are expecting the market to move higher due to ideas of smaller crops from all over Latin America, and expecially Brazil. Brazilian exports are reduced on what is called reduced inventories held by exporters and producers, although bearish traders think that the producers are just holding back and trying to force prices higher.  Producers are less interested in selling as well as the market tries to guage production potential in Brazil after earlier drought and cold weather hurt trees at and before flowering time. There is plenty of rain now, but dry weather could return soon and stress the trees again. There are also reports of short crops in parts of Central America and some areas in South America due to the lack of farmer investment from the low prices. However, supplies in importer countries are called high and are providing a cushion for buyers, and buyers have been able to keep differentials low even with the low prices in futures.  

Overnight News: Certified stocks are higher today and are about 1.922 million bags. The ICO composite price is now 115.92 ct/lb. Brazil will get showers and storms this week. Temperatures should average near to below normal. Colombia should get scattered to isolated showers. Central America and southern Mexico should get scattered showers or dry conditions. Temperatures should average near to above normal. ICE said that 1,417 delivery notices were posted against December contracts today and that total deliveries for the month are now 1,498 contracts.   

Chart Trends:  Trends in New York are mixed. Support is at 126.00, 125.00, and 123.00 March, and resistance is at 131.00, 132.00 and 134.00 March. Trends in London are down with objectives of 1710 January.  Support is at 1740, 1710, and 1680 January, and resistance is at 1800, 1830, and 1850 January.

Sugar              

General Comments: Futures were higher in both New York and London Friday, and chart trends are turning up again as the market rallies in part with strength in energy markets and in part on U.S. dollar weakness. Brazil features reduced sugarcane crush and continued emphasis on ethanol production and reduced sugar production as it moves to cover domestic demand at the expense of exports. Trends are turning up in London and in New York after the price action last week on ideas of reduced availability of sugar to the market. There have been no big demand reports, and the lack of demand against ideas of big world production is keeping the market in a fundamentally bearish mode. Even so, the charts in both New York and London imply that higher prices are still possible 

Overnight News:  Brazil should feature showers and storms this week. Temperatures should be near to below normal. 

Chart Trends: Trends in New York are mixed to up with objectives of 1560, 1590, and 1630 March. Support is at 1520, 1500, and 1480 March, and resistance is at 1550, 1580, and 1620 March. Trends in London are mixed to up with objectives of 406.00 March. Support is at 391.00, 385.00, and 383.00 March, and resistance is at 399.00, 405.00, and 412.00 March.

Cocoa              

General Comments:  Futures closed lower, but New York held the weekly lows and then bounced to more moderate losses. The charts show that cocoa futures could hit swing targets with further weakness in prices. Some talk of disease in crops in the Ivory Coast has created much of the recent buying interest, but no news has been heard to confirm the talk so the fundamental supply side issue faded. It has been iunseasonally wet in parts of West Africa, so some diseases could be forming. Demand ideas are holding strong as processor margins have been great. Ivory Coast processing data was strong in a report released Tuesday. World production ideas remain high. 

Overnight News: Scattered showers are expected in West Africa. Temperatures will average near to above normal.  Malaysia and Indonesia should see frequent showers. Temperatures should average above normal. Brazil will get scattered showers and near to above normal temperaturas. ICE certified stocks are unchanged today at 3.777 million bags. ICE said that zero notices were posted for delivery today and that total deliveries for the month are now 116 contracts.

Chart Trends:  Trends in New York are down with objectives of 2080 March. Support is at 2080, 2070, and 2060 March, with resistance at 2130, 2150, and 2180 March. Trends in London are down with objectives of 1540 March. Support is at 1540, 1510, and 1380 March, with resistance at 1390, 1600, and 1630 March.

 

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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.