About The Author

Jack Scoville

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

COTTON
General Comments: Cotton was limit up for almost the entire session yesterday. It was a big move and one related partly to the US and world weather. Ideas are that US Cotton especially is in a bad spot due to the extreme dry and hot weather in western Texas. Someone is caught short in the market and now will have to pay much higher prices to get out or get covered. Demand and stronger world prices are also supporting July futures. The current weather is less than ideal in West Texas and at other producing areas around the world. The weather is bad in India and China, with big heat seen in India and Pakistan and too much rain in China. Lost Chinese production could mean increased sales for the US, especially now since the US will have the quality the Chinese need. Futures traders are looking at a market that still has strong export demand and has seen some very uneven planting and growing conditions in the US. Much of the Southeast and parts of the Delta have seen big rains, especially in the last couple of days. Texas has seen some precipitation, but dryland areas are still very dry. temperatures have turned hot. Oklahoma and Kansas have improved conditions due to recent rains. It has been hot and dry on the Indian Subcontinent and also in China. There are ideas that the US is now running short of high quality Cotton to deliver to the exchange and to overseas buyers. Demand remains strong in export markets.
Overnight News: The Delta will be mostly dry after some rain today and the Southeast will get big rains over the next couple of days, then a drier weekend. Temperatures should be mostly below normal. Texas will see mostly dry conditions. Temperatures will be above normal. The USDA average price is now 88.29 ct/lb. ICE said that certified stocks are now 74,143 bales, from 87,541 bales yesterday.
Chart Trends: Trends in Cotton are up with objectives of 9940 July. Support is at 9260, 9200, and 9140 July, with resistance of 9380, 9440, and 9500 July.

Crop Progress
Date 27-May 20-May 2017 Avg
Cotton Planted 62 52 61 59
Cotton Squaring 7 6 3

FCOJ
General Comments: FCOJ was a little higher again yesterday. It was a moderate volume session as traders seemed to be waiting for some news. Most traders are focused on the weather as the hurricane season is coming. A sub tropical storm moved just to the west of major growing areas over the weekend and yesterday with big rains. Some drought busting rains have been reported in Florida in the last week, and most areas should have plenty of precipitation for now. The situation in the state should continue to improve as the rainy season appears to be underway/ The market is still dealing with a short crop against weak demand. Florida producers are seeing golf ball sized fruit. Conditions are reported as generally good. Irrigation is being used, but less now after the rains. Brazil also could use more rain as Sao Paulo has been hot and dry. Generally good conditions are reported in Europe and northern Africa.
Overnight News: Florida should get showers and storms. Temperatures will average near to above normal. Brazil should get mostly dry weather and near to above normal temperatures.
Chart Trends: Trends in FCOJ are mixed. Support is at 169.00, 166.00, and 165.00 July, with resistance at 172.00, 173.00, and 176.00 July.

COFFEE
General Comments Futures in New York and London closed a little lower again yesterday as the US Dollar moved sharply higher. The truckers strike in Brazil that has delayed shipments provided support. Southern growing areas into pars of Minas Gerais saw temperatures cold enough to potentially damage crops last week, but there have been few, if any reports of damage. Temperatures have moderated this week, but more cold weather is coming as the Winter season has just started. It remains mostly dry in Arabica areas, and there is no rain in the forecast for this week. Origin is still offering in Central America and is still finding weak differentials. Speculators anticipate big crops from Brazil and from Vietnam this year and have remained short in the market. Robusta remains the stronger market as Vietnamese producers and merchants have not been willing to sell at current prices. Vietnamese cash prices are weaker this week with good supplies noted in the domestic market. Current rains in the country are favorable for the crops.
Overnight News: Certified stocks are lower today and are about 2.012 million bags. The ICO composite price is now 112.90 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.
Chart Trends: Trends in New York are mixed. Support is at 117.00, 115.00, and 112.00 July, and resistance is at 121.00, 124.00 and 126.00 July. Trends in London are mixed. Support is at 1730, 1720, and 1700 July, and resistance is at 1760, 1780, and 1800 July.

SUGAR
General Comments: Futures were unchanged to lower in New York and lower in London. Futures seem to have settled into a consolidation pattern. The ISO forecast record supplies yesterday but this did not have much effect on prices. News that India is looking to dump Sugar on the world market due to overproduction there also did little to move the market. It could be that most of the bad news is already part of the price. Most traders remain focused on the big world production, and most who wanted to sell the market have done so. It is dry in parts of Brazil, including some Sugarcane production areas, and there is some talk of losses to the crop in the near future unless rains return soon. There are no real rains in the forecast for now. It has also been very cold and some cane might have been damaged. However, the initial harvest has been big and processing has been more active than last year. India is back to export Sugar this year after being a net importer for the last couple of years. The government is subsidizing industry and producers to help maintain an active market flow and to prevent the buildup of Sugar in storage. India could raise the internal price or try to stockpile supplies in meetings that are now scheduled for this week. Thailand has produced a record crop and is selling. Middle East and North African buyers are reported to be buying normal or less than normal amounts of Sugar in the world market right now.
Overnight News: Brazil will get dry weather. Temperatures should be near to above normal.
Chart Trends: Trends in New York are mixed to up with objectives of 1270 and 1370 July. Support is at 1200, 1170, and 1150 July, and resistance is at 1260, 1280, and 1310 July. Trends in London are mixed to up with objectives of 368.00 August. Support is at 345.00, 340.00, and 331.00 August, and resistance is at 361.00, 367.00, and 369.00 August.

DJ ISO Raises 2017-18 Sugar Surplus Forecast to Record High
By David Hodari
LONDON–Global sugar production is still expected to hit a record high this season, the International Sugar Organization said as it revealed on Tuesday a further boost to forecasts in its quarterly market report.
In its report on the global sugar supply demand balance, the ISO said it expected production in the 2017-18 season to increase 10.3% from the previous season to 185.208 million metric tons, its highest-ever level.
The dramatic 6-million-ton increase to its February forecast was attributed to “spectacular results at the final stage of the campaign in two Asian giants–India and Thailand.”
So far this year, raw-sugar futures are down 18%, having hit two-and-a-half-year lows in late April before rallying more than 11% since then.
With production expected to rise by 17.4 million tons, consumption was not forecast to keep up, rising only 3.2 million tons, or 1.9%.
As a result, global supplies are expected to swing from a 3.7 million-ton deficit in 2016-17 to a 10.5 million-ton surplus in 2017-18, the ISO said.
Huge forecast increases in Thailand and India are likely to dwarf the 1.5 million-ton downward correction the ISO has introduced for Brazil, the report said.
Nevertheless, prices are expected to remain weak, if not become weaker.
The downward drift from above 20 cents a pound in January 2017 to the present level below 13 cents a pound is confirmation that the global sugar market’s fundamental supply and demand balance is not supportive of prices, the report said.
With a second surplus season expected next year, too, “even a strong drop in production currently projected for Brazil might just manage to reduce the world surplus in 2018-19 rather than bring the world sugar economy into a deficit phase before the end of 2019. This makes a sustained rise in world market values rather unlikely,” the ISO said.
World export availability, though, is not expected to rise significantly “due to some large stock rebuilding projected for several exporters,” the report said, noting an expected 361,000-ton increase on the previous season.

COCOA
General Comments Futures were lower in both markets and trends are down. It is possible that Cocoa has now made a significant top in both markets. Funds have turned sellers and appear ready to continue to liquidate long positions due in part to the trend change. Fears that developed about the EU economy over the weekend spilled into Cocoa as Europe is the largest per capita consumer of chocolate in the world. Italy is having problems again and there are fears that the problems there could spread to other EU states.. Showers and more seasonal temperatures have been seen in the last few weeks to improve overall production conditions in West Africa. Conditions also appear good in East Africa and Asia. The mid crop harvest is active in West Africa.
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 dry conditions and near to above normal temperatures. ICE certified stocks are lower today at 5.168 million bags.
Chart Trends: Trends in New York are down with no objectives. Support is at 2480, 2460, and 2420 July, with resistance at 2600, 2640, and 2690 July. Trends in London are mixed to down with objectives of 1760 and 1670 July. Support is at 1810, 1780, and 1750 July, with resistance at 1870, 1900, and 1930 July.

DJ CMAA Spot Cocoa Bean and Price Indications – May 29
Ex-dock or warehouse U.S. Eastern Seaboard North of Hatteras, in U.S. dollars
per metric ton. Settling price for May 25, 2018. All pricing is considered
nominal. Source: Cocoa Merchants Association of America.
N/A denotes not available.
Type Differential/ Price
Ratio
Main Crop Ghana, Grade 1 310 2,917.00
Main Crop Ivory Coast, Grade 1 225 2,832.00
Main Crop Nigerian, Grade 1 175 2,782.00
Ecuador 200 2,807.00
Sanchez f.a.q. NA
PPP Natural African Type Carton Cocoa Butter 2.85 7,429.95
Cocoa Press Cake – Natural 10/12% Butterfat 0.50 1,300.00
Ex-dock or warehouse U.S. Eastern Seaboard North of Hatteras, in U.S. dollars
per metric ton. Settling price for May 18, 2018. All pricing is considered
nominal. Source: Cocoa Merchants Association of America.
N/A denotes not available.
Type Differential/ Price
Ratio
Main Crop Ghana, Grade 1 310 3,018.00
Main Crop Ivory Coast, Grade 1 225 2,933.50
Main Crop Nigerian, Grade 1 185 2,893.00
Ecuador 200 2,908.00
Sanchez f.a.q. 173 2,880.50
PPP Natural African Type Carton Cocoa Butter 2.79 7,555.32
Cocoa Press Cake – Natural 10/12% Butterfat 0.50 1,350.00
Ex-dock or warehouse U.S. Eastern Seaboard North of Hatteras, in U.S. dollars
per metric ton. Settling price for May 11, 2018. All pricing is considered
nominal. Source: Cocoa Merchants Association of America.
N/A denotes not available.
Type Differential/ Price
Ratio
Main Crop Ghana, Grade 1 310 3,134.00
Main Crop Ivory Coast, Grade 1 225 3,049.00
Main Crop Nigerian, Grade 1 185 3,009.00
Ecuador 200 3,024.00
Sanchez f.a.q. 173 2,996.50
PPP Natural African Type Carton Cocoa Butter 2.83 7,991.92
Cocoa Press Cake – Natural 10/12% Butterfat 0.48 1,350.00
Ex-dock or warehouse U.S. Eastern Seaboard North of Hatteras, in U.S. dollars
per metric ton. Settling price for May 4, 2018. All pricing is considered
nominal. Source: Cocoa Merchants Association of America.
N/A denotes not available.
Type Differential/ Price
Ratio
Main Crop Ghana, Grade 1 310 3,112.00
Main Crop Ivory Coast, Grade 1 225 3,027.00
Main Crop Nigerian, Grade 1 170 2,972.00
Ecuador 200 3,002.00
Sanchez f.a.q. 173 2,974.50
PPP Natural African Type Carton Cocoa Butter 2.75 7,705.50
Cocoa Press Cake – Natural 10/12% Butterfat 0.46 1,300.00

Questions? Ask Jack Scoville today at 312-264-4322