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 yesterday as buying appeared after futures held chart support. 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. Texas has seen some precipitation, but dry land areas are still very dry. 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 as the weekly export sales report showed strong volumes last week. USDA showed good planting progress in its reports last week.
Overnight News: The Delta and the Southeast will get big rains, mostly in the southeast, this week. Temperatures should be mostly below normal. Texas will see mostly dry conditions, but some showers are possible early next week. Temperatures will be above normal. The USDA average price is now 80.32 ct/lb. ICE said that certified stocks are now 79,433 bales, from 79,220 bales yesterday. ICE said that there were 0 contracts tendered for delivery today and that total deliveries are now 214 contracts. USDA said that net weekly Upland Cotton export sales were 153,300 bales this year and 229,300 bales next year. Net Pima sales were 2,100 bales this year and 0 bales next year.
Chart Trends: Trends in Cotton are mixed. Support is at 8330, 8290, and 8200 July, with resistance of 8540, 8600, and 8700 July.
General Comments: FCOJ was mostly lower on follow through selling and as rains were reported again in much of the state of Florida. FCOJ is in a weather market as dry conditions are reported in Florida and in production areas of Brazil. However, some drought busting rains are now being reported in Florida/ These rains have been big and could be interrupting the last of the harvest in the state. The market is still dealing with a short crop against weak demand. Florida producers are seeing marble sized to 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 his weekend. Temperatures will average near to below normal. Brazil should get mostly dry weather and near to above normal temperatures. The best precipitation should be this weekend. There have been 14 deliveries so far in New York against May contracts.
Chart Trends: Trends in FCOJ are mixed to up with objectives of 171.00 and 177.00 July. Support is at 167.00, 165.00, and 162.00 July, with resistance at 173.00, 176.00, and 179.00 July.
General Comments Futures in New York were a little higher in consolidation trading. London also closed a little higher. The Brazil harvest is about to get started and both markets are feeling selling pressure from a stronger US Dollar. Ideas are that about 55 million bags of Coffee will be harvested. The weather is dry in Arabica areas, but there have been some showers in Conillon areas. There are some who expect less production this year, but not many. Others say that the crop will be much smaller next year due to the dry conditions now. Origin is still offering in Central America and is still finding weak differentials. Buyers of lower grades are pulling back a bit to wait for more offers from Brazil. 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 are not willing to sell at current prices and are willing to wait for a rally. Vietnamese cash prices were lower last week with good supplies noted in the domestic market. Current rains are favorable for the crops.
Overnight News: Certified stocks are lower today and are about 1.990 million bags. The ICO composite price is now 110.98 ct/lb. Brazil will get drier conditions until showers appear on Saturday. Temperatures should be near to above normal this week and near to below normal next week. Colombia should get isolated showers. Central America and southern Mexico should get isolated showers or dry conditions. Vietnam will get showers. ICE said that there were 0 deliveries today in New York and that total deliveries for the month are 252 contracts.
Chart Trends: Trends in New York are mixed to down with objectives of 115.00 and 111.00 July. 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 1720, 1700, and 1670 July, and resistance is at 1780, 1810, and 1840 July.
DJ Brazil Forecasts 2018 Total Coffee Harvest of 58 Million Bags
SÃO PAULO–Brazilian farmers will produce a record crop of coffee in 2018, helped by a jump in productivity and good weather conditions, the country’s agriculture agency said Thursday.
The agency, known as Conab, forecast a total crop of 58 million 132-pound bags for this year, which would be an increase of 29.1% compared with 2017. In the January report, Conab forecast a crop in a range from 54.4 million bags to 58.5 million bags.
The harvest of the arabica variety of coffee will reach 44.3 million bags this year, up 29.4% from 2017, Conab said. Conab forecast an arabica crop of 41.7 million bags to 44.6 million bags in the January report.
Farmers will produce 13.7 million bags of robusta coffee this year, up 27.9% from a year before, according to Conab. In the January report, the agency forecast a range from 12.7 million bags to 14 million bags.
Productivity will increase 27.8% this year from last year, according to Conab. Production of arabica coffee in Brazil is strongly affected by a two-year cycle in which a bigger crop is produced in even-numbered years, followed by a smaller crop in odd-numbered years as the plants “rest.”
Production of robusta coffee is recovering after the end of a drought that hit the state of Espirito Santo, source of most of Brazil’s production of the variety.
Brazil is the world’s biggest producer and exporter of coffee.
General Comments: Futures were a little higher. It appears to be mostly a short covering rally that many think will not last a long time. Most traders remain focused on big world production. There is still big supplies available to the market. It has turned 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. 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. 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, but a few showers are possible on Saturday. Temperatures should be near to above normal this week and near to below normal next week.
Chart Trends: Trends in New York are mixed. Support is at 1120, 1100, and 1080 July, and resistance is at 1160, 1190, and 1200 July. Trends in London are mixed. Support is at 318.00, 316.00, and 311.00 August, and resistance is at 328.00, 332.00, and 336.00 August.
General Comments Futures were higher in recovery trading. Short term trends are turning down, and the markets stopped just short of resistance on the charts yesterday.. Both New York and London could be forming a top. Ideas that world production has been largely sold remain part of the rally. Showers and more seasonal temperatures have been seen in the last few weeks to improve overall production conditions in West Africa. The mid crop harvest is starting, and wire reports indicate that some initial mid crop harvest is underway in all countries. Yield estimates imply that variable yields can be expected. The harvest should begin soon in Ivory Coast and Ghana.
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 5.263 million bags. ICE said that 0 delivery notices were posted against May contracts and that total deliveries for the month are now 222 contracts.
Chart Trends: Trends in New York are mixed to down. Support is at 2630, 2600, and 2550 July, with resistance at 2740, 2800, and 2860 July. Trends in London are mixed to down. Support is at 1850, 1810, and 1780 July, with resistance at 1900, 1930, and 1950 July.