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MORNING SOFTS COMMENTS
Jack Scoville



10/22/2018

The PRICE Futures Group JSL, SA de CV JSL, SA
Chicago, IL San Salvador, El Salvador San José, Costa Rica
(312) 264-4322 (503) 2260-7806 (506) 2282-7024
jscoville@pricegroup.com jslsadecv@comcast.net jslsa@comcast.net

COTTON           

General Comments:  Cotton was higher and made new highs for the move, in part as China gears up to import a lot more Cotton and in part due to the USDA reports.  USDA increased old crop export demand and the change flowed to the ending stocks for this year and for next year.  All other estimates were unchanged on the domestic side.  The market hopes for significant new demand from China, but mst wait until Friday when the Trump administration will announceits next moves against the Chinese.  Cotton would be a loser in a trade war with China as China once again looks ready to become a major world buyer.  Chinese planting weather was poor with too much rain.   Demand ideas remain strong, especially with the mills and their on call position waiting to be covered in the next couple of weeks.  Lost Chinese production could mean increased sales for the US, especially now since the US will have the quality the Chinese need.  China is moving to allow more imports by increasing quotas now.  Ideas have been that US Cotton conditions remain poor due to the extreme dry and hot weather in western Texas.  The current weather is less than ideal in West Texas as hot and dry conditions continue and is not good at other producing áreas around the world.  The Southeast US is too wet, but has begun to dry out.  The weather is bad in India and China, with big heat seen in India and Pakistan and too much rain in China.  The monsoon has started in southern India, but Pakistan remains very hot and dry and is now facing drought conditions. 

Overnight News:  The Delta will be mostly dry and the Southeast will get drier weather this week.  Both áreas have chances for showers late this weekend.  Temperatures should be mostly below normal.  Texas will see mostly dry conditions. Temperatures will be above normal.  The USDA average price is now 90.94 ct/lb.  ICE said that certified stocks are now 79,472 ba1es, from 78,421 bales yesterday.

Chart Trends:  Trends in Cotton are mixed to up with objectives of 9940 July.  Support is at 9450, 9270, and 9170 July, with resistance of 9650, 9680, and 9740 July.

 

DJ USDA Supply/Demand: U.S. Cotton - Jun 12

                                    U.S. Cotton Supply and Use

 ========================================================================

Item                        2017/2018                   2018/2019

                        prev        Jun 12          prev         Jun 12

=========================================================================

Area

                        Million acres

Planted                 12.61        12.61        13.47 *        13.47 *

Harvested               11.10        11.10        11.13 *        11.13 *

                        Pounds

Yield per harv. acre      905          905          841 *          841 *

                        Million 480 pound bales

Beginning stocks         2.75         2.75           4.70           4.20

Production              20.92        20.92          19.50          19.50

Imports                  0.01         0.01           0.01           0.01

Supply, total           23.68        23.68          24.21          23.71

Domestic use             3.35         3.35           3.40           3.40

Exports                 15.50        16.00          15.50          15.50

Use, total              18.85        19.35          18.90          18.90

Unaccounted              0.13         0.13           0.11           0.11

Ending stocks            4.70         4.20           5.20           4.70

Avg. farm price      67.00 - 69.0067.00 - 69.00  55.00 - 75.00  60.00 - 80.00

=========================================================================

 

DJ USDA Supply/Demand: World Cotton - Jun 12

                               World Cotton Supply and Use

                                (Million 480-pound bales)

=============================================================================

                     beginning                domestic exports         ending

                       stocks   prod  imports    use     use     loss  stocks

=============================================================================

                                           2018/19 (Projected)

World

                  May   88.21  121.19   41.12  125.44   41.12    0.22   83.75

                  Jun   88.21  120.40   41.06  125.35   41.07    0.22   83.02

United States

                  May    4.70   19.50    0.01    3.40   15.50    0.11    5.20

                  Jun    4.20   19.50    0.01    3.40   15.50    0.11    4.70

Total foreign

                  May   83.51  101.69   41.12  122.04   25.62    0.11   78.55

                  Jun   84.01  100.90   41.05  121.95   25.57    0.11   78.32

Major exporters

                  May   30.50   55.24    2.14   34.20   21.69    0.02   31.97

                  Jun   30.70   55.28    2.17   34.27   21.71    0.02   32.15

Major importers

                  May   51.08   43.40   36.52   83.78    2.69    0.09   44.45

                  Jun   51.38   42.60   36.42   83.65    2.64    0.09   44.02

=============================================================================

 

FCOJ

General Comments:  FCOJ was lower as Florida weather remains good and demand prospects remain poor.  USDA left its production report for the current crop about unchanged, and the weather for the next crop is called good.  The tariff wars between the US and Canada, Mexico, and the EU are hurting export demand ideas.  The EU imports a lot of FCOJ and these exports could be hurt by any retaliation made by Europe.  The EU has indicated that FCOJ will be on the list of ítems subject to increased tariffs and that the measures will be enacted next month.  The growing conditions in Florida should continue to improve as the rainy season appears to be underway.  The market is still dealing with a short crop against weak demand.  Demand is bad enough that year on year inventories are increasing even with the very bad production last year.  Florida producers are seeing golf ball sized or larger fruit.  Conditions are reported as generally good, although it is dry in the state this week.  Brazil could use more rain as Sao Paulo has been hot and mostly dry.  The harvest there is about to start.  Generally good, but somewhat variable conditions are reported in Europe and northern Africa.

Overnight News:  Florida should get scattered showers each day.  Temperatures will average near to above normal.   Brazil should get mostly dry weather, but some showers tomorrow, and near to above normal temperatures. 

Chart Trends:  Trends in FCOJ are down with objectives of 154.00 and 153.00 July.  Support is at 152.00, 150.00, and 142.00 July, with resistance at 157.00, 159.00, and 161.00 July.

 

DJ USDA Crop Production: U.S. Citrus Fruits - Jun 12

   Citrus Fruits:  Utilized Production by Crop, State, and United States,

                  2016-17 and Forecasted June 1, 2018 

(The crop year begins with the bloom of the first year shown and ends with the

completion of harvest the following year)

================================================================================

                       Utilized Production            Utilized Production

                            Boxes/1                       Ton Equivalent

   Crop and State     --------------------------------------------------------

                         2016-17      2017-18              2016-17    2017-18

===============================================================================

                     ------ 1,000 Boxes 2/   -----      ----- 1,000 Tons ------

===============================================================================

Oranges

California, all 2/            48,300        44,500             1,932          1,780

 Early, mid, and Navel 3/     39,300        35,000             1,572          1,400

 Valencia                      9,000         9,500               360            380 

Florida, all                  68,850        44,950             3,098          2,023

 Early, mid, and Navel 3/     33,000        18,950             1,485            853

 Valencia                     35,850        26,000             1,613          1,170 

Texas, all 2/                  1,370         2,110                58             90

 Early, mid, and Navel 3/      1,090         1,550                46             66

 Valencia                        280           560                12             24 

United States, all           118,520        91,560             5,088          3,893

 Early, mid, and Navel 3/     73,390        55,500             3,103          2,319

 Valencia                     45,130        36,060             1,985          1,574 

Grapefruit

California   2/                4,400         4,000               176            160

Florida, all                   7,760         3,880               330            165

 Red                           6,280         3,180               267            135

 White                         1,480           700                63             30

Texas 2/                       4,800         5,700               192            228 

United States                 16,960        13,580               698            553 

Tangerines and mandarins 4/

California 2/                 23,900        21,000               956            840

Florida                        1,620           750                77             36 

United States                 25,520        21,750             1,033            876 

Lemons 2/

Arizona                        1,650         1,300                66             52

California                    20,500        20,500               820            820 

United States                 22,150        21,800               886            872 

===================================================================================

1/ Net pounds per box: oranges in California-80, Florida-90, Texas-85; grapefruit

in California-80, Florida-85, Texas-80; tangerines and mandarins in California-80,

Florida-95; lemons-80.

2/ Estimates for current year carried forward from previous forecast.

3/ Navel and miscellaneous varieties in California. Early (including Navel) and

midseason varieties in Florida and Texas.

4/ Includes tangelos and tangors.

 

COFFEE 

General Comments  Futures were slightly higher in New York, but a little lower in London.  Both markets remain in trading ranges.  Demand for Robusta is good as Brazil said it was preparing to buy Robusta in the world market to cover domestic needs.  The dry weather in Brazil production áreas for Robusta meant less production and tere is now not enough to cover the domestic demand.  Meanwqhile, Robusta offers from Vietnam are less right now and traders say internal supplies are tight due to a smaller than expected harvest last year.  A bigger new crop harvest is expeted as current rains are good.  It remains mostly dry in Arabica áreas of Brazil, and there is no rain in the forecast for the next week.  Origin is still offering in Central America and is still finding weak differentials.  No coffee is moving in Nicaragua due to the political tensions there, and the volcano eruption in Guatemala has hurt the logistical situation there.  Speculators anticipate big crops from Brazil and from Vietnam this year and have remained short in the market. 

Overnight News:  Certified stocks are higher today and are about 2.043 million bags.  The ICO composite price is now 110.72 ct/lb.  Brazil will get drier conditions.  Temperatures should be near to above normal today, then below normal by this weekend.  Colombia should get isolated showers.  Central America and southern Mexico should get showers.  Vietnam will get showers. 

Chart Trends:  Trends in New York are down with objectives of 115.00 and 111.00 July.  Support is at 115.00, 112.00, and 109.00 July, and resistance is at 119.00, 122.00 and 125.00 July.  Trends in London are mixed to down with objectives of 1710 and 1680 July.   Support is at 1720, 1700, and 1670 July, and resistance is at 1740, 1760, and 1780 July.

 

DJ Brazil Exported 1.7 Mln Bags of Coffee in May -- Cecafe

  SÃO PAULO--Brazilian coffee exports fell in May from a year earlier, partly because of a truckers' strike during the month that closed highways around the country, according to exporters group Cecafe.

  The South American country exported 1.7 million 132-pound bags of coffee last month, a decline of 34.7% from the same month a year earlier, Cecafe said Tuesday.

  Sales abroad of the arabica variety of coffee fell 38.4% to 1.4 million bags, while exports of robusta beans more than doubled to 46,488 bags from 19,799 bags in the same month a year earlier.

  Exports of roasted, ground and instant coffee fell 15.7% in May to 234,042 bags, Cecafe said.

 

SUGAR              

General Comments:  Futures were mixed in New York and a little higher in Londonl.  Short term trends are starting to turn up again after the price action this week.  Both markets have tested support after an initial move higher and held, so moves higher are posible now.  However, upside potential is considered limited and this is called mostly a short covering rally.  Analysts noted that the market still has plenty of Sugar and no real fear of short supplies, so the currency moves just add to potential availability.  Prices have been supported by the dry weather in Brazil and also the truckers strike there that is now over.  Shipments to mills and ports have started again.  It is dry in parts of Brazil, including some Sugarcane production áreas, and there is some talk of losses to the crop in the near future unless rains return soon.  There are no real rains in the forecast for now.  The harvest so far has been big and processing has been more active than last year.  India is back to export Sugar this year after being a net importer for the last couple of years.  The government is subsidizing industry and producers to help maintain an active market flow and to prevent the buildup of Sugar in storage.  India will give aid of up to $1 billion to mills and will also stockpile supplies.  Thailand has produced a record crop and is selling. 

Overnight News:  Brazil will get dry weather, but light precipitation is posible today.  Temperatures should be near normal. 

Chart Trends: Trends in New York are mixed to up with objectives of 1320, 1380, and 1390 October.  Support is at 1250, 1220, and 1190 October, and resistance is at 1280, 1320, and 1340 October.  Trends in London are mixed.  Support is at 347.00, 337.00, and 335.00 August, and resistance is at 356.00, 360.00, and 361.00 August.

 

DJ USDA Supply/Demand: U.S. Sugar - Jun 12

                              U.S. Sugar Supply and Use

==============================================================================

Item                            2017/2018                    2018/2019

                            prev        Jun 12           prev         Jun 12

==============================================================================

                                  1,000 short tons, raw value

Beginning stocks             1,876       1,876          1,901          1,876

Production                   9,252       9,238          8,981          8,961

Beet sugar                   5,221       5,221          5,036          5,036

Cane sugar                   4,031       4,017          3,945          3,925

 Florida                     1,998       1,983          2,085          2,085

 Hawaii                          0           0              0              0

 Lousiana                    1,859       1,859          1,680          1,680

 Texas                         175         175            180            160

Imports                      3,422       3,387          3,365          3,365

 TRQ                         1,788       1,788          1,355          1,355

 Other program                 350         300            350            350

 Other                       1,284       1,299          1,660          1,660

 Mexico                      1,269       1,269          1,645          1,645

  Total supply              14,551      14,501         14,247         14,203

Exports                        170         170             50             85

Deliveries                  12,480      12,455         12,655         12,655

 Food                       12,325      12,300         12,500         12,500

 Other                         155         155            155            155

Miscellaneous                    0           0              0              0

 Total use                  12,650      12,625         12,705         12,740

Ending stocks                1,901       1,876          1,542          1,463

Stocks to use ratio           15.0        14.9           12.1           11.5

==============================================================================

 

DJ Brazil Center-South Sugar Crush Up 2.2% in Second Half of May

  SAO PAULO--Brazilian sugar mills in the country's center-south region crushed more cane in the second half of May compared with a year earlier, according to industry group Unica.

  Center-south mills crushed 32.4 million metric tons of cane in the period, a rise of 2.2% from the same period a year earlier. They produced 1.3 million tons of sugar, down 23.8%, and made 1.7 billion liters of ethanol, an increase of 44.5%.

  The production mix for the second half of last month was 32.5% sugar to 67.5% ethanol. A year earlier, the mix was 47.5% sugar and 52.5% ethanol.

  Brazil is the world's biggest sugar producer and exporter, and the center-south grows about 90% of the country's cane.

  In the season from April 1 through June 1, mills in the region crushed 134.8 million tons of cane, up 20.2% from the same period a year earlier. Sugar production fell 3.9% to 5.5 million tons, and ethanol output rose 51.9% to 6.6 billion liters.

  The production mix for the season through June 1 was 34.5% sugar to 65.5% ethanol. A year earlier, the mix was 45.2% sugar and 54.8% ethanol.

 

COCOA              

General Comments  Futures were higher in recovery trading.  The daily charts show that bottoms could be forming and getting completed now..  Futures have now fallen enough to fill a big gap on the weekly charts, and now the market is deciding on the next move.  Ideas are that demand can start to improve with the lower price levels, but the world economic situation is still in a flux after the G-7 meetings.  Fears that developed about the EU economy last week spilled into Cocoa as Europe is the largest per capita consumer of chocolate in the world.  North American demand could be pressured due to the economic wars started in the US against its neighbors.  Showers and more seasonal temperatures have been seen in the last few weeks to improve overall production conditions in West Africa.  Conditions also appear good in East Africa and Asia.  The mid crop harvest is active in West Africa. 

Overnight News:  Scattered showers are expected in West Africa, but most main áreas will be dry.  Temperatures will average near to above normal.  Malaysia and Indonesia should see frequent showers.  Temperatures should average above normal.  Brazil will get dry conditions and near to above normal temperatures.  ICE certified stocks are lower today at 5.060 million bags. 

Chart Trends:  Trends in New York are mixed.  Support is at 2300, 2260, and 2250 July, with resistance at 2460, 2480, and 2500 July.  Trends in London are mixed.  Support is at 1650, 1600, and 1570 July, with resistance at 1710, 1750, and 1780 July.




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