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 higher and made new highs for the recovery move yesterday as second swing targets were hit. Demand has been strong and merchants have had trouble finding the Cotton in domestic cash markets. However, the on call short position held by merchants has been largely erased for now as merchants have become bigger buyers on the recent price break. Attention will shift to the May position and both May and July feature big on call positions that seem to be getting a little smaller. The weekly sales of Upland Cotton showed a significant recovery from the previous week and were considered bullish to prices. The downside could be limited if the US Dollar keeps working lower. USDA showed its projections for the coming year in its Outlook Conference on Friday. Prospective planted area was increased, but not as much as had been anticipated by some in the trade. The production estimate showed that there should be plenty of Cotton here, and good supplies were noted in recent production reports. Prices overall have been much higher than most commercials had expected. Prices could remain strong until closer to harvest. There have also been quality concerns left over from the hurricanes and the freeze during the growing season.
Overnight News: The Delta and the Southeast will get precipitation starting the middle of this week. Temperatures should be on both sides of normal. Texas will see mostly dry conditions. Temperatures will be warm. The USDA average price is now 78.54 ct/lb. ICE said that certified stocks are now 101,222 bales, from 93,388 bales yesterday. ICE said that 1 notice was posted for delivery and that total deliveries for the month are now 577 contracts.
Chart Trends: Trends in Cotton are up with objectives of 8250 May. Support is at 8080, 8030, and 7920 May, with resistance of 8250, 8350, and 8440 May.
General Comments: FCOJ was a little lower yesterday. The rally remains stalled as the weather has not been threatening in Florida or in Brazil. Trends are still up on the weekly charts, but sideways on the daily charts, and the market is still dealing with a short crop against weak demand. The current weather is good as temperatures are warm and it is mostly dry, but the crop is small. 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, and producers are now into the Valencia crop with the early and mid harvest completed. Florida producers are actively harvesting and performing maintenance on land and trees. Some early flowering has been reported in the groves, and some fruit is forming. Irrigation is being used.
Overnight News: Florida should get mostly dry weather and warm temperatures. Brazil should get scattered showers and near to below normal temperatures.
Chart Trends: Trends in FCOJ are mixed to down with objectives of 139.00 and 131.00 May. Support is at 144.00, 143.00, and 140.00 May, with resistance at 147.00, 150.00, and 152.00 May.
General Comments Futures were mixed again yesterday, a little higher in New York and a little lower in London. Both markets are looking for news to cause a move in either direction. The charts present a sideways appearance for now and speculators remain very short, and now are adding to those positions. They anticipate big crops from Brazil and from Vietnam this year and think that buyers are well covered right now. New York traders are noting the good weather currently being reported in Brazil and expect another bumper crop. There were reports from London of increased Vietnamese selling, but these were not verified. The Tet holiday is no ending, so offers should start to increase. 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 low.
Overnight News: Certified stocks are higher today and are about 1.892 million bags. The ICO composite price is now 113.94 ct/lb. Brazil will get daily chances for showers. Temperatures should be near to above 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. ICS said that 281 notices were posted for delivery today and that total deliveries are the month are now 1,535 contracts.
Chart Trends: Trends in New York are mixed to down with objectives of 118.00 May. Support is at 119.00, 116.00, and 113.00 May, and resistance is at 124.00, 126.00 and 128.00 May. Trends in London are mixed. Support is at 1730, 1720, and 1680 May, and resistance is at 1790, 1800, and 1830 May.
General Comments: Futures were a little lower, with London the weaker market. Trends are sideways on the daily and weekly charts. London remains at important support areas. The overall feel of the market is that prices for now are cheap enough, but both markets appear to need a catalyst to work higher in a big way. Futures could drift in a sideways to lower pattern if no news is found. Ideas that Sugar supplies available to the market can increase in the short-term have been key to the selling. India will export up to 1.0 million tons of Sugar this year after being a net importer for the last couple of years. Ethanol demand continues strong, although Corn based ethanol has been cheaper and the choise for many buyers. Ideas are that petroleum 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 enough to meet any demand.
Overnight News: Brazil should feature daily chances for showers. Temperatures should be near to above normal
Chart Trends: Trends in New York are mixed. Support is at 1350, 1320, and 1310 May, and resistance is at 1380, 1400, and 1440 May. Trends in London are mixed. Support is at 357.00, 353.00, and 50.00 May, and resistance is at 361.00, 366.00, and 374.00 May.
General Comments Futures closed higher in New York and in London again yesterday and new highs for the move were made in both markets. Trends are up in both markets on the daily and weekly charts. 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. The recent grind data was weaker for North America, but positive for Europe and Asia. Demand is not universally strong, but has been improving and is likely to continue to improve as long as prices stay generally weak as processing margins are said to be very strong.
Overnight News: Scattered showers 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 cry conditions and near to above normal temperatures. ICE certified stocks are a little lower today at 4.484 million bags.ICE ssid that 0 delivery notices were posted today and that total deliveries for the month are now 443 contracts.
Chart Trends: Trends in New York are up with objectives of 2250 and 2300 May. Support is at 2150, 2140, and 3200 May, with resistance at 2230, 2250, and 2290 May. Trends in London are up with objectives of 1510, 1520, and 1570 May. Support is at 1510, 1490, and 1480 May, with resistance at 1570, 1590, and 1610 May.
Questions? Ask Jack Scoville today at 312-264-4322
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