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 closed lower after an early rally attempt failed. Speculators were the best sellers and seemed to react more to the charts than any fundamental news. USDA showed the potential for a big planted area this year, and farmers have started to plant. The increased area had been generally expected, but the magnitude of the projected increase was above most trade expectations. Farmers in just about all production areas plan to plant more Cotton. It is drier in the Delta and Texas after some big rains that hit again in the second half of last week, and drier weather will be seen in the Southeast. Demand has been strong. USDA showed another week of strong export sales on Thursday. Export sales have been very strong and above many trade expectations at the beginning of the marketing year. Prices overall have been much higher than most commercials had expected, but the recent carry spread weakness could be a sign that merchants have been able to get covered in the last couple of weeks. Prices could remain strong until closer to harvest, but there is a chance that the highs have been seen.
Overnight News: The Delta and the Southeast will get periods of precipitation off and on all week. Temperatures should be mostly near to above normal. Texas will see mostly cry conditions. Temperatures will be warm. The USDA average price is now 77.73 ct/lb. ICE said that certified stocks are now 57,224 bales, from 57,224 bales yesterday. USDA said that Cotton is now 7% planted, from 3% last year and 3% average.
Chart Trends: Trends in Cotton are mixed to down with objectives of 7950, 7870, and 7730 May. Support is at 8070, 8030, and 7940 May, with resistance of 8220, 8270, and 8380 May.
General Comments: FCOJ was lower in range trading yesterday. The market is still dealing with a short crop against weak demand. USDA should highlight the shaft crop when it releases its citrus reports next week. It last estimated the crop at 45 million boxes and there is no real reason to expect any big changes to that estimate. The current weather is good as temperatures are warm and it is mostly dry, but some big rains are reported in northern parts of the state. The harvest is progressing well and fruit is being delivered to processors. 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. Flowering is mostly over, and fruit is forming and starting to develop. Irrigation is being used.
Overnight News: Florida should get mostly dry weather this week and showers this weekend. Temperatures will average near to above normal. Brazil should get scattered showers and near to below normal temperatures. The best precipitation should be this weekend.
Chart Trends: Trends in FCOJ are mixed. Support is at 133.00, 135.00, and 134.00 May, with resistance at 142.00, 143.00, and 145.00 May.
General Comments Futures were lower after starting the day off with a rally attempt. The buying interest did not last,so futures went lower and are testing contract lows again. There did not seem to be much to talk about in the market yesterday. Funds and other speculators have been the best sellers. Some roasters buying is seen on a scale down basis, but it is not big enough buying to force a trend change. Traders sense underlying interest in buying the market amid ideas that the bearish news is finally priced in, but buying the market has only led to losses in recent months. Origin is offering in Central America and is still finding weak differentials. Business is getting done, with Honduras the best seller. Traders anticipate big crops from Brazil and from Vietnam this year and have seen no reason to cover the short position in a big way. New York traders expect another bumper crop in Brazil. Robusta continues to hold as Vietnamese producers and merchants are not willing to sell at current prices and are willing to wait for a rally. Prices instead fell in Vietnam last week in response to price weakness in London and no differential improvement.
Overnight News: Certified stocks are slightly lower today and are about 1.974 million bags. The ICO composite price is now 112.03 ct/lb. Brazil will get drier conditions. 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 showers in the north starting tomorrow.
Chart Trends: Trends in New York are mixed to down with no objectives. Support is at 116.00, 113.00, and 110.00 May, and resistance is at 112.00, 122.00 and 124.00 May. Trends in London are down, with objectives of 1650 May. Support is at 1700, 1670, and 1640 May, and resistance is at 1760, 1780, and 1800 May.
General Comments: Futures were higher again yesterday on follow through speculative short covering. Trends remain down on the charts, and the short covering rally might not last very long. Traders hear about big production from the world producers and mostly maintain short positions. Ideas that Sugar supplies available to the market can increase in the short-term are keys to the speculative selling interest. Ideas of potential problems in the world economy due to all of the trade war talk also hurt futures overall. India will export up to 4.0 million tons of Sugar this year after being a net importer for the last couple of years. The government there is reducing or eliminating export taxes in an effort to promote selling i world markets. It has a significant surplus after several years of lower production. Thailand has produced a record crop and is selling. Mills in Brazil have decided to make more Ethanol as world Crude Oil and products prices have been very strong. Corn based ethanol is cheaper, but the mills will offer the Sugar based ethanol, anyway Brazil still has plenty of Sugar to sell even with the different refining mix.
Overnight News: Brazil will get drier weather. Temperatures should be near to above normal.
Chart Trends: Trends in New York are down with objectives of 1180 and 1120 July. Support is at 1230, 1200, and 1170 July, and resistance is at 1270, 1280, and 1300 July. Trends in London are down with objectives of 332.00 August. Support is at 340.00, 337.00, and 334.00 August, and resistance is at 346.00, 348.00, and 352.00 August.
General Comments Futures closed sharply higher as buying returned with the new month and new quarter. There were reports of beneficial rains in most countries in the region. Trends in both New York and London remain up. Ideas of smaller world production that has been largely sold remain part of the rally, and ideas of strong demand from processors remains the other part of the rally. Most in the trade anticipate the increased demand, and current West Africa weather is hot enough and dry enough to create production concerns. Showers and more seasonal temperatures have been seen in the last week to improve overall production conditions. The mid crop harvest is starting, and wire reports indicate that some initial mid crop harvest is underway in Nigeria. No yield reports have been seen yet. Demand has been improving and is likely to continue to improve 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 higher today at 4.811 million bags.
Chart Trends: Trends in New York are mixed to up with objectives of 2780 and 2930 May. Support is at 2600, 2550, and 2510 May, with resistance at 2660, 2710, and 2730 May. Trends in London are mixed to up with objectives of 1890 and 1990 May. Support is at 1730, 1710, and 1680 May, with resistance at 1800, 1830, and 1860 May.
Questions? Ask Jack Scoville today at 312-264-4322
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