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 what appeared to be some speculative profit taking and some producer selling. The selling seems as related to the calendar as to anything going on it Cotton. Chart patterns are bullish and a new leg higher could get started at any time. The Cotton quality has been dropping as the harvest moves forward, and the lower quality seems to be the biggest effects from the hurricanes seen during the growing season and then the freeze in the west at the tail end of the growing season. Some traders say that USDA is seriously underestimating demand for the fiber, while the others look to the high USDA ending stocks estimates and suggest that any demand can be easily met. The demand bulls are winning the battle of ideas and price right now. Harvest conditions are good in just about all areas for any remaining needs.
Overnight News: The Delta and the Southeast should get mostly dry conditions. Some precipitation is likely today and Friday Temperatures should be above normal through Friday, then below normal. Texas will see mostly dry conditions until some Snow appears on Sunday. Temperatures will be above normal early in the week and below normal late in the week. The USDA average price is now 73.07 ct/lb. ICE said that certified stocks are now 47,628 bales, from 47,628 bales yesterday. Chart Trends: Trends in Cotton are mixed to up with objectives of 7720 March. Support is at 7430, 7380, and 7340 March, with resistance of 7670, 7700, and 7730 March.
General Comments: FCOJ closed lower on follow through selling. The weather so far in Florida has been warm, but it is too early to expect a freeze. In the meantime, the harvest in Florida remains active and the buying interest has fallen away. Demand remains the big problem as the consumer continues to look for alternatives, and the potential for better production and more imports from Brazil remains a major issue for the market as well. Overall weather conditions are considered good in Florida at this time, with mostly dry and warm conditions. The harvest is progressing well and fruit is being delivered to processors and the fresh fruit packers. Trees in Florida that are still alive now are showing fruit of good sizes, although many have lost a lot of the fruit. Florida producers are actively harvesting and performing maintenance on land and trees. The emphasis is on the fresh fruit market now, with processors mostly getting packing house eliminations at this time. However, processors are taking deliveries from producers as well.
Overnight News: Florida should get mostly dry weather and near to above normal temperatures. Scattered showers are expected today. Brazil should get mostly dry conditions and near to above normal temperatures. Some showers are possible this weekend.
Chart Trends: Trends in FCOJ are down with no objectives. Support is at 140.00, 136.00, and 135.00 January, with resistance at 146.00, 150.00, and 152.00 January.
General Comments: Futures were higher in New York and mixed to mostly higher in London on what appeared to be speculative short covering. The funds and other speculators were buying to cover shorts before end of the year. News was hard to find due to the end of the year, but there was talk of a big crop that will need to be sold in Vietnam. We were in Vietnam for the last week and saw some farms near the city of Da Lat. Trees were full of fruit and the fruit was tuning color. Some harvesting was being seen, and mills were open and producing Green coffee. It looked like a good crop was coming in this area from our farm visits. Internal prices in Vietnam remain at high levels compared to London, but were weaker last week. The situation seems little changed in Latin America. Brazil exports are reduced at about 2.8 million bags on what is called reduced inventories held by exporters and producers. Many are concerned about the potential for reduced Brazil production due to earlier drought and the cold and dry Winter, although some exporters suggest that the loss potential has been greatly overestimated. There is plenty of rain in some areas now 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.
Overnight News: Certified stocks are higher today and are about 1.951 million bags. The ICO composite price is now 113.48 ct/lb. Brazil will get showers and storms again starting Thursday. 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 8 delivery notices were posted against December contracts today and that total deliveries for the month are now 3,389 contracts.
Chart Trends: Trends in New York are mixed. Support is at 120.00, 118.00, and 115.00 March, and resistance is at 125.00, 126.00 and 127.00 March. Trends in London are mixed. Support is at 1700, 1680, and 1650 January, and resistance is at 1780, 1800, and 1830 January.
General Comments: Futures were higher on what appeared to be some speculative short covering tied to profit taking after the recent move lower. Some funds and other speculators appeared to be buying to set profits and losses for the end of the year. The next target for the bears will be the June lows near 1350 March, but the price action could be more stable at current levels as futures have already fallen a long way. Price action has been disappointing due to the strong demand for ethanol that has diverted some Brazil mill production away from Sugar. Mills in Brazil have decided to make more Ethanol as world Crude Oil and products prices have been very strong. Ideas are that these prices can continue strong as OPEC and Russia have agreed to keep production constrained compared to world demand. The move comes even as the ISO now estimates the world Sugar production surplus at 5 million tons for the year. There does not seem to be any big Sugar demand and in the end the lack of demand has kept futures from being able to rally.
Overnight News: Brazil should feature showers and storms again starting on Thursday. Temperatures should be near to below normal CONAB now estimated Brazil Sugarcane production at 635.59 million tons for 2017-18, down 1.7% from the least estimate and 3.3% from last year. Ethanol production is now estimated at 27.04 billion liters, up 3.6% from the last estimate, but down 2.7% from last year. Sugar production is estimated at 39.5 million tons, from 39.4 million in its previous estimate and 38.7 million last year.
Chart Trends: Trends in New York are down with objectives of `1280 March. Support is at 1360, 1350, and 1320 March, and resistance is at 1400, 1430, and 1460 March. Trends in London are mixed to down with no objectives. Support is at 361.00, 358.00, and 355.00 March, and resistance is at 370.00, 374.00, and 377.00 March.
General Comments: Futures closed higher in both markets, and trends remain sideways for the short-term as the West African harvest hits the market. Prices are weak overall due to the ongoing harvest, but have found some good buying interest at current levels. World production ideas remain high. Harvest reports show good to very good production will be seen this year in West Africa. Ghana and Ivory Coast expects a very good crop this year. Nigeria and Cameroon are reporting good yields and also good quality. The growing conditions in other parts of the world are generally good. East Africa is getting better rains now. Good conditions are still seen in Southeast Asia and harvest should be strong now amid mostly dry weather.
Overnight News: Mostly dry conditions 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 temperatures. ICE certified stocks are lower today at 3.492 million bags.
Chart Trends: Trends in New York are down with objectives of 1800 March. Support is at 1900, 1870, and 1850 March, with resistance at 1940, 1950, and 2020 March. Trends in London are mixed. Support is at 1380, 1350, and 1320 March, with resistance at 1420, 1450, and 1460 March.
DJ Mild Harmattan Wind Bodes Well for Nigeria’s 2017-18 Cocoa Production
By Obafemi Oredein
IBADAN, Nigeria-The harmattan wind has been mild so far in Nigeria’s cocoa-producing regions without any negative impact on the crop, industry officials and traders said Tuesday.
“We haven’t seen a severe harmattan yet,” said Vincent Ohwojakpor, a vice president of the Cocoa Association of Nigeria. “Moisture in the soil isn’t lost as [would] usually happen.”
The harmattan, a dry and dusty wind that blows into west Africa from the Sahara Desert, arrived in Nigeria’s cocoa-producing regions about a fortnight ago, raising concerns that it could rapidly dry moisture from the soil and slow main and midcrop cocoa development. The harmattan is found typically from December to January or February.
Tunji Adebola, a trader in Ibadan, capital of southwest Oyo state, said that, should it become serious, the harmattan wind could affect the 2017/18 crop by drying up young cocoa pods, cause immature pods to ripen earlier than expected and lead to bushfires that destroy cocoa plantations. “But this has not been the case as at now,” he said.
Mr. Ohwojakpor added: “The prospect for next year’s midcrop cocoa is good.”
“There were rains in some parts of Ondo state at the weekend,” said Toba Adenowuro, cocoa desk officer at the Ministry of Agriculture, in Akure, Ondo state. Outbreaks of bushfires that are common in cocoa farms and plantations during the harmattan have not been reported.”
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