Jack Scoville is an often quoted market analyst in the grain and soft commodities sectors. You will find his commentary throughout the Reuters, Wall Street Journal, Dow Jones, Bloomberg, and Barron's publications. Contact Mr. Scoville at (312) 264-4322
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General Comments: Cotton closed a little lower as some liquidated positions before the long weekend. Traders will keep an eye on the export sales reports and the overall weather conditions for clues to the price direction, but the strong demand should continue to Support futures in the short term. The market is seeing that the US has mostly good conditions for planting and development. However, planting progress has been behind the normal pace for the early going due to recent rains. Enough rain has fallen now, so some dry weather would be favorable for fieldwork, but forecasts call for more showers into next week. US farmers plan to plant much more Cotton than they did last year. Planting is underway and planted area should be very big. Export demand has remained strong and much stronger than expected by just about everyone. US mills still have yet to price a lot of on call purchases. The May fixations are getting done, but there are still a lot of July contracts open that should support that month in the next couple of weeks.
Overnight News: The Delta and Southeast should get more rain starting Sunday. Temperatures should will average above normal. Texas will see the potential for heavy rains today, then dry weather again Friday and over the weekend. Temperatures will be above normal, but below normal with the storm system. The USDA average price is now 72.38 ct/lb. ICE certified stocks are now 314,766 bales, from 325,082 bales yesterday. USDA said that net Upland Cotton export sales were 307,200 bales this year and 204,200 bales next year. Net Pima sales were 9,700 bales this year and 11,500 bales next year.
Chart Trends: Trends in Cotton are mixed. Support is at 7460, 7400, and 7340 May, with resistance of 7520, 7550, and 7580 May.
General Comments: FCOJ closed slightly lower in quiet trading. Price action could have marked a short term failure on the charts this week, and the market is now testing support areas. The market has been trying to extend recent grains as the weather remains dry in Florida, but weak demand is keeping a lid on prices. Dry weather in Florida has been the main reason for the buying interest. Domestic production remains very low due to the greening disease and drought. Trees have lost blooms and the fruit is developing. Small fruit is now being reported everywhere. Irrigation is being heavily used to prevent loss. The harvest has been very active. Early and Mid Oranges are moving mostly to processors, and this part of the harvest is winding down. The Valencia harvest is moving to processors and into the fresh market and is very active.
Overnight News: Florida should see mostly dry weather and near to above normal temperatures. Showers are possible on Wednesday and Thursday. Brazil should get episodes of scattered showers and near normal temperatures.
Chart Trends: Trends in FCOJ are mixed to up with objectives of 174.00, 186.00, and 194.00 May. Support is at 159.00, 155.00, and 151.00 May, with resistance at 166.00, 169.00, and 170.00 May.
General Comments: New York and London both closed lower after trading higher in the first part of the day. It was a disappointing day and left many traders wondering about the overall market trend. The markets are still in a trading range for now. A lot of analysts say that the market needs to rally due to the reduced production this year and next, but so far the market has been holding, but refusing rally attempts. The world cash market remains slow. Prices are low for producers and differentials remain generally weak. Roasters remain the best buyers in futures but are not active in the cash market. Ideas are that Robusta supplies are tight once again, and that London has better chart patterns to promote a rally than New York. New York continues to show a generally sideways pattern. The cash market in Central America shows little buying interest against moderate selling interest. Peru is also said to be offering good volumes. Vietnamese prices are now at or near record highs, and there does not seem to be much Robusta around from other sources, with both Brazil and Indonesia mostly out of the market.
Overnight News: Certified stocks are higher today and are about 1.395 million bags. The ICO composite price is now 133.98 ct/lb. Brazil will get chances for showers today, then dry weather or light showers again. Temperatures should average near normal. Colombia should get scattered to isolated showers. Central America and southern Mexico should get mostly dry conditions. Temperatures should average near to above normal.
Chart Trends: Trends in New York are mixed. Support is at 137.00, 135.00, and 132.00 May, and resistance is at 140.00, 143.00 and 144.00 May. Trends in London are mixed. Support is at 2140, 2120, and 2090 May, and resistance is at 2180, 2200, and 2230 May.
General Comments: New York and London closed lower after failing to hold an early rally attempt. The selling came in response to the UNICA data. The data showed much less production, but a larger percentage of the crush went to Sugar production instead of Ethanol production. Some of the selling in London cameo n long liquidation in the May contract before it stops trading today. The daily charts show generally mixed trends. The market held a Support zone and rallied strongly, and follow through buying could change short term trends to up. The EU has short stocks as does India, and prices have been firm in both areas. The EU said it was studying the idea of imports, but the Indian government has approved the import of 500,000 tons of Sugar with no duty. The amount authorized to import was at the low end of expectations. The world situation would imply that production can recover after El Nino induced losses last year. The weather service there is looking for a normal monsoon. Brazil could also have better crops this year as rains have been good in Center South areas. It remains much dryer than normal in the Northeast. Southeast Asia has good growing conditions.
Overnight News: Brazil will get dry weather or light showers. Temperatures should average near to above normal.
Chart Trends: Trends in New York are mixed. Support is at 1650, 1620, and 1590 July, and resistance is at 1700, 1720, and 1790 July. Trends in London are mixed. Support is at 467.00, 458.00, and 452.00 August, and resistance is at 478.00, 480.00, and 485.00 August.
DJ Brazil Center-South Sugar Crush Down 43.5% the Second Half of March–Unica
By Jeffrey T. Lewis
SAO PAULO–Brazilian sugar mills in the country’s center-south region crushed less cane in the second half of March compared with a year earlier, according to industry group Unica.
Center-south mills crushed 8 million metric tons of cane in the period, a decrease of 43.5% from the same period a year earlier. They produced 270,000 tons of sugar, down 41.9%, and made 327 million liters of ethanol, a decline of 44%.
The production mix for the second half of last month was 35.15% sugar to 64.85% ethanol. A year earlier, the mix was 33.5% sugar and 66.5% 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, 2016, through the same date this year, mills in the region crushed 607.1 million tons of cane, down 1.7% from the same period a year earlier. Sugar production rose 14.1% to 35.6 million tons, and ethanol output fell 9.1% to 25.7 billion liters.
The production mix for the season through April 1 was 46.3% sugar to 53.7% ethanol. A year earlier, the mix was 40.65% sugar and 59.35% ethanol.
General Comments: Futures markets closed lower and were lower all day in response to disappointing grind data from Europe. The grind was slightly higher than last quarter and last year, but not as much as the trade had expected. The North American grind data will be released today, and the Asian grind data should be released soon. The North American data is expected to be relatively strong, and the Asian grind could be strong on reports of better sales of chocolate in the region.. The chart patterns imply that a test of recent lows is likely, but the price action yesterday hs made traders alert for a turn. The production this year could be a record in Ivory Coast and is above last year in Ghana. Both countries ar experiencing moderate weather as rains have returned. Demand has been weak, but might start to improve soon as prices for Cocoa and products have turned much lower. Mostly good conditions are reported in Southeast Asia. The demand remains a question, with everyone expecting continued weaker demand in Europe. Ideas are that the US demand might be somewhat improved, but no one has real confidence in those ideas.
Overnight News: Scattered showers are expected in West Africa. Temperatures will average near to above normal. Malaysia and Indonesia should see scattered showers in all areas. Temperatures should average near normal. Brazil will get mostly dry conditions or light showers and near to above normal temperatures. ICE certified stocks are higher today at 5.059 million bags.
Chart Trends: Trends in New York are down with objectives of 1930 and 1830 May. Support is at 1920, 1880, and 1850 May, with resistance at 2010, 2060, and 2090 May. Trends in London are down with objectives of 1560 May. Support is at 1560, 1540, and 1510 May, with resistance at 1630, 1660, and 1710 May.
DJ European Cocoa Grinding Rise 1.1% in 1Q 2017 – ECA
By David Hodari
LONDON–European processing volumes of raw cocoa beans rose 1.1% in the first quarter of 2017 year-on-year, falling below industry expectations, according to data released Tuesday by the European Cocoa Association.
Cocoa grinding–the amount of raw cocoa processed into butter and powder for the manufacturing of confectionary and chocolate–rose to 339,485 metric tons of beans in the January-March period, the Brussels-based ECA said.
The rise reversed a 0.9% fall in the fourth quarter of 2016 but first-quarter grinding remained below the expectations of traders surveyed The Wall Street Journal. On average, traders had expected an increase of 1.5%, with one London-based trader describing even that forecast as “pretty anemic.”
Grinding figures are often used as a proxy for demand but traders say they can also reflect the placement of factories or the movement of beans.
The release of the figures came minutes after Swiss-based Barry Callebaut AG (BARN.EB)–the world’s largest cocoa processing company–released its first-half results which showed a 2% fall in sales volume in its Europe, Middle East, and Africa division.
Grinding numbers for North America, from the National Confectioners Association, and for Asia–from the Cocoa Association of Asia–are expected to follow.
The ECA represents 20 companies in the European Union and Switzerland, including Barry Callebaut, Cargill Cocoa & Chocolate, Ferrero SpA, Nestle SA (NESN.EB) and Mondelez International Inc. (MDLZ).
Questions? Ask Jack Scoville today at 312-264-4322
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Past results are not necessarily indicative of future results. Investing in futures can involve substantial risk of loss & is not suitable for everyone. Trading foreign exchange also involves a high degree of risk. The leverage created by trading on margin can work against you as well as for you, and losses can exceed your entire investment. Before opening an account and trading, you should seek advice from your advisors as appropriate to ensure that you understand the risks and can withstand the losses.
The information and data in this report were obtained from sources considered reliable. Their accuracy or completeness is not guaranteed and the giving of the same is not to be deemed as an offer or solicitation on our part with respect to the sale or purchase of any securities or futures. The Price Futures Group, its officers, directors, employees, and brokers may in the normal course of business have positions, which may or may not agree with the opinions expressed in this report. Any decision to purchase or sell as a result of the opinions expressed in this report will be the full responsibility of the person authorizing such transaction. Reproduction and/or distribution of any portion of this report are strictly prohibited without the written permission of the author. Trading in futures contracts, options on futures contracts, and forward contracts is not suitable for all investors and involves substantial risks. ©2017
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