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 sharply lower on follow through selling. The selling seemed to be mostly long liquidation and started last Friday with the weak export sales report from USDA. Some selling cameo n the stronger US Dollar amid ideas that the Dollar might have bottomed. The weekly sales of Upland Cotton were as low as they had been in several months, and the news provided a fundamental reason to sell futures. The weekly charts suggest that a bigger correction might be coming as futures could work lower in the short-term to find new demand. If so, the downside could be limited if the US Dollar keeps working lower. However, the charts suggest that prices could move to 7750 March and perhaps as low as about 7500 March before finding significant new buying. Current buying has been reflecting the fact that merchants need to buy futures to cover on call positions. The weekly On Call report issued last week showed that more Cotton needs to be bought in the futures market. The production report showed that there is plenty of Cotton here, but getting it out of producers hands has been difficult and prices have been much higher than most commercials had expected. Commercials are being forced now to buy Cotton at higher levels to cover the big on call position of unpriced Cotton that they have contracted for.
Overnight News: The Delta and the Southeast will get precipitation on Thursday and again this weekend. Temperatures should be on both sides of normal. Texas will see mostly dry conditions. Temperatures will be warm, but will turn cooler this weekend. The USDA average price is now 75.83 ct/lb. ICE said that certified stocks are now 63,142 bales, from 52,645 bales yesterday.
Chart Trends: Trends in Cotton are down with no objectives. Support is at 7780, 7720, and 7700 March, with resistance of 7940, 8000, and 8100 March.
General Comments: FCOJ was higher and made new highs for the move as the small crop in Florida continues to be felt. It is turning cold again in the US, and there are some fears that the cold weather could damage crops. There has apparently been some minor damage from the freeze episodes earlier in the month.. The cold weather seen early in the month probably improved fruit quality for the majority of the production. The current weather is good as temperatures are warm and there is little rain around, but the crop is small, and another round of cold temperatures is forecast for the US It is not yet certain if the cold will reach into Florida. The harvest is progressing well and fruit is being delivered to processors and the fresh fruit packers. Trees in Florida 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. Some early flowering has been reported in the groves. Processors mostly getting field run fruit. Trends are still up on the daily charts. The weekly charts also show the potential for prices to work higher over time
Overnight News: Florida should get mostly dry weather and near to above normal temperatures. Brazil should get scattered showers and near to above normal temperatures.
Chart Trends: Trends in FCOJ are up with objectives of 156.00 and 162.00 March. Support is at 150.00, 148.00, and 144.00 March, with resistance at 153.00, 156.00, and 158.00 March.
General Comments: Futures were slightly lower on speculative trading tied to the strength in the US Dollar. The charts present a sideways appearance for now and speculators remain very short and might want to reduce part of those positions. They traded on both sides of the market yesterday. New York traders are noting the good weather currently being reported in Brazil and expect another bumper crop. However, ideas of a huge crop might now be part of the futures price and might not really be there as the weather has not been perfect. The reality is that some areas remain too dry while others have seen excessive rains. Producers there do thing an adequate to good crop is possible, though, as rains in general have been timely. Reports from Vietnam have suggested that producers there are willing to wait through Tet for better prices before selling much. The situation seems little changed in Latin America. There are 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. Honduras has been a very active exporter and offers from most other countries are seen. Differentials in Central America are weak.
Overnight News: Certified stocks are lower today and are about 1.967 million bags. The ICO composite price is now 116.75 ct/lb. Brazil will get showers today, then drier weather. Temperatures should be near to above normal through Sunday, then near to below normal. Colombia should get isolated showers. Central America and southern Mexico should get isolated showers or dry conditions. Vietnam will get mostly dry weather, but some storms are possible in the far south. Temperatures should average near to above normal.
Chart Trends: Trends in New York are mixed to up with objectives of 127.00, 131.00, and 134.00 March. Support is at 120.00, 118.00, and 113.00 March, and resistance is at 126.00, 128.00 and 131.00 March. Trends in London are mixed to up with objectives of 1840 and 1940 March. Support is at 1750, 1730, and 1700 March, and resistance is at 1790, 1810, and 1830 March.
General Comments: Futures were higher again yesterday and trends are turning up at least for the short-term. New York charts show that futures held an important support area at 1300 March, and now the market has rallied and chart patterns are more positive. London remain above important support areas, but trends could be turning up for the short-term in this market as well. The overall feel of the market is that prices for now are cheap enough, but both New York and London appear to need a catalyst to work higher in a big way. However, speculators are short and a short-term short covering rally is possible now. Ideas that Sugar supplies available to the market can increase in the short-term have been key to the selling. 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. Even so, there are ideas that world Sugar supplies are still more than enough to meet any potential demand scenario.
Overnight News: Brazil should feature showers today and tomorrow, then drier weather. Temperatures should be near to above normal through Sunday, then near to below normal
Chart Trends: Trends in New York are mixed to up with objectives of 1390 and 1440 March. Support is at 1350, 1320, and 1300 March, and resistance is at 1370, 1390, and 1410 March. Trends in London are mixed to up with objectives of 366.00 and 374.00 March. Support is at 358.00, 353.00, and 351.00 March, and resistance is at 365.00, 367.00, and 371.00 March.
General Comments: Futures closed lower and prices in both New York and London fell away from short-term resistance on the charts. It was a consolidation trade and futures in both markets remain mostly in a trading range. The market is waiting for the Harmattan winds that can suck moisture from the soil and trees and really hurt bean quality and production. These winds have not developed as of yet, but could at any time. It has become hot and dry in many parts of West Africa, so conditions are good for the winds to form. Some crop losses might be possible if the current conditions persist even without the winds. The gut slot for offers from the main crop is passing, and the sales by the government suggest that offers down the road can be less. Cocoa prices can hold in a sideways or up pattern until the mid crop is better defined and starts to move to the market.
Overnight News: Mostly dry conditions are expected in West Africa. Temperatures will average above normal. Malaysia and Indonesia should see frequent showers. Temperatures should average above normal. Brazil will get cry conditions and near to above normal temperatures. ICE certified stocks are a little lower today at 3.937 million bags.
Chart Trends: Trends in New York are mixed. Support is at 1930, 1900, and 1870 March, with resistance at 2010, 2030, and 2070 March. Trends in London are mixed. Support is at 1350, 1330, and 1320 March, with resistance at 1390, 1440, and 1450 March.
DJ Cocoa Port Arrivals Slightly Below Last Year — Market Talk
1421 GMT – Farmers in the Ivory Coast sent 1.158 million tons of cocoa to ports between the beginning of the current season and Jan. 28, down from 1.166 million tons at the same point last year. Those figures are the mean of arrivals reported by Bloomberg and Reuters. Reuters reports 67,000 tons arriving at ports in the period Jan. 22 and 28. Weaker-than-expected grinding figures and lower-than-expected global stocks growth reported last week by the International Cocoa Organization have led to a stalemate in markets, with prices only 0.4% higher than they were at the start of January. Should the strength of the current crop continue, pricing pressure may continue. (firstname.lastname@example.org; @davidhodari)
Questions? Ask Jack Scoville today at 312-264-4322
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