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
General Comments: Cotton was lower on ideas of improving crop conditions here and around the world. The futures market is moving its focus from the current tight situation to one with much more potential production in the US and overseas for the coming production year. Warmer and drier weather is expected this week in most production areas, and growing conditions should be good. The charts show that July trends are down and that December is also in a down trend. These trends are likely to remain down in the longer term as the US and maybe the world will produce much bigger crops this year. Monsoon rains are appearing in India and Pakistan and ideas of bigger production in that part of the world. On the other hand, China has been too dry in eastern areas, but is getting improved rains now. Western areas are rated as good. Central Asia has been dry, but conditions are rated as good due to irrigation.
Overnight News: The Delta and Southeast should get a few showers through this weekend. Temperatures should average near to above normal. Texas will see mostly dry weather. Temperatures will be above normal. The USDA average price is now 71.74 ct/lb. ICE certified stocks are now 468,011 bales, from 458,935 bales yesterday.
Chart Trends: Trends in Cotton are down with objectives of 7410 and 7370 July. Support is at 7380, 7350, and 7300 July, with resistance of 7560, 7670, and 7710 July.
General Comments: FCOJ closed higher and trends are trying to turn up on the charts. It looks like there is some speculative buying going on as prices are relatively cheap and the hurricane season is underway. The Florida weather has shown some improvement as rains have moved into the state. These rains were very beneficial as the state had been in drought. There are no systems in the Atlantic to cause concern about tropical storm development that could be detrimental to trees and fruit. Trends remain mostly down on the charts, and so far there has been very little buying interest. The demand side remains weak and there are plenty of supplies in the US. Brazil has been exporting FCOJ to the US to cover the short Florida crop. Domestic production remains very low due to the greening disease and drought. Trees now are showing fruit of varying sizes and overall conditions are called good because of the irrigation. Brazil crops remain in mostly good condition.
Overnight News: Florida should get scattered showers, Brazil should get mostly dry conditions and near normal temperatures this week and a few showers this weekend.
Chart Trends: Trends in FCOJ are mixed. Support is at 136.00, 134.00, and 130.00 May, with resistance at 142.00, 145.00, and 148.00 May.
General Comments: New York and London closed lower in “Turnaround Tuesday” trading and as there are no real threats for Coffee areas in Brazil from cold weather. It was cold last weekend, but not cold enough to damage crops. Relatively mild conditions are expected for the rest of the week, and the weather should also be drier to promote more active harvesting and crop drying. Reports from Brazil indicate that the current harvest is featuring small beans at this time, but the harvest will be expanding in the short term and there is a chance for better quality later on. Demand ideas remain weak as most roasters are still not buying much in world cash markets. Differentials are stable.
Overnight News: Certified stocks are higher today and are about 1.517 million bags. The ICO composite price is now 123.27 ct/lb. Brazil will get mostly dry weather, but showers are possible today. Temperatures should average near to above normal. Colombia should get scattered to isolated showers. Central America and southern Mexico should get scattered showers, with big storms today in southern Mexico. Temperatures should average near to above normal.
Chart Trends: Trends in New York are mixed. Support is at 125.00, 122.00, and 119.00 July, and resistance is at 129.00, 133.00 and 135.00 July. Trends in London are mixed to up with objectives of 2055 and 2145 July. Support is at 2000, 1970, and 1940 July, and resistance is at 2040, 2070, and 20110 July.
DJ ICO: Global Coffee Supplies to Remain Strong
By David Hodari
LONDON– The International Coffee Organization’s composite indicator price slightly fell in May, thanks to high export levels and rising inventory levels.
The ICO composite indicator fell by 3.8% on the month in May, to 125.40 U.S. cents a pound, down from 130.39 U.S. cents in April.
While inventory levels of robusta beans look likely to rise 26.9%, arabica production is expected to drop by 18.3% during the 2017/2018 year, the ICO report said.
Strong exports in the first seven months of the coffee year combined with a drop in the Brazilian real, the easing of weather-related concerns, and rising robusta inventories to depress coffee prices in May, the ICO said.
That glut saw robusta price drop 5% versus its price in April, falling below the 100 US cents per pound mark for the first time since September 2016.
The Brazilian Government Agency, Conab, has now released its second estimate of production, the ICO said. Following the biennial production cycle, output is expected to fall 11.3% to 45.56 million bags compared to the same agency’s estimate of 51.37 million bags in the previous year. This, despite a climate-driven recovery in robusta after last year’s poor crop, the ICO added.
The ICO recorded a 3.1% increase in global exports from coffee producing countries in the months from October 2016 to April 2017 and forecasts a 0.1% global production increase for the 2016 coffee year.
London-traded robusta was last down 0.54% at $2,109.00 a ton, and arabica was down 1.18% at $1.26 a pound.
General Comments: New York and London were lower, but continued to hold the trading range. The close was weak and implies that new lows in prices are coming. Demand should see a short term increase soon as Ramadan is ending. That could create some new buying interest as stocks in Moslem countries are probably a little low. However, the market remains more interested in the production potential now in Brasil and in a few months from northern countries and also India and Thailand. Ideas are that world Sugar production will be higher as long as Brazil keeps the current production mix together. The harvest is moving along and more cane is now being delivered to mills. Ideas are also that India and Thailand will have bigger crops this year after the failed monsoon cut Sugarcane production in both countries last year. They both need a good monsoon season, and monsoon rains are now being reported in India. Most Sugarcane areas have now seen some precipitation or will see some by the end of the week. Southeast Asia has good growing conditions.
Overnight News: Brazil will get mostly dry conditions. Temperatures should average near to above normal.
Chart Trends: Trends in New York are mixed to down with objectives of 1380 October. Support is at 1390, 1360, and 1330 October, and resistance is at 1470, 1510, and 1550 October. Trends in London are mixed to down with no objectives. Support is at 394.00, 391.00, and 388.00 October, and resistance is at 403.00, 410.00, and 418.00 October.
General Comments: Cocoa futures closed lower, but prices are trying once again to stage a breakout from what could turn out to be a major low. London has already turned its trends up, but so far New York has not penetrated the top of the range. The harvest is basically over for Cocoa in West Africa and this has helped relieve selling pressure on futures. Traders look for demand to improve as lower prices filter down to the retail level, but chocolate prices have been holding strong at stores. The fundamentals remain mostly bearish, but are now part of the price. Production is improved this year and demand has not improved as much as hoped, but demand is expected to increase over time. West Africa is seeing more rain after being a little dry and trees should be in good condition.
Overnight News: Scattered showers and storms 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 to above normal. Brazil will get mostly dry conditions or light showers and near to above normal temperatures. ICE certified stocks are lower today at 5.629 million bags.
Chart Trends: Trends in New York are mixed. Support is at 1980, 1950, and 1920 July, with resistance at 2080, 2110, and 2130 July. Trends in London are up with objectives of 1770 July. Support is at 1600, 1550, and 1520 July, with resistance at 1670, 1710, and 1730 July.
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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