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 lower as forecasts for Hurricane Dorian implied that the storm might not provide much damaging weather to production areas. The state with the most storm potential is now North Carolina, but even there the storm might not provide much more than a glancing blow to the states agricultural interests. The system was initially headed to Florida but forecast tracts started to move the landfall potential further north along the coast into the Southeast. There was also a chance that the system would curve north over the ocean and move into the Carolinas. There is potential for Cotton losses in the Southeast no matter where the system lands. Bolls are starting to open now and the fiber could be colored or could the bolls could drop if there is enough wind. The system will create new questions about production potential. Conditions in the Texas Panhandle have improved with some recent showers and ideas are that production potential had been stabilized. Demand remains a real problem for the market as export sales overall have been poor. The world market remains quiet with very limited Chinese buying interest anywhere. Ideas are that USDA will be forced to lower export demand estimates in the September updates next week.
Overnight News: The Delta should be dry and Southeast should see scattered showers this week with biggest amounts in coastal areas from Dorian. Temperatures should be mostly near to below normal early this week and near to above normal later this week. Texas will have mostly dry weather. Temperatures will average above normal after a cooler day today. The USDA average price is now 54.10 ct/lb. ICE said that certified stocks are now 12,802 ba1es, from 12,802 bales yesterday.
Chart Trends: Trends in Cotton are mixed. Support is at 5750, 5720, and 5660 December, with resistance of 5930, 5950, and 6000 December.
Date 1-Sep 25-Aug 2018 Avg
Cotton Setting Bolls 97 90 95 96
Cotton Bolls Opening 36 28 28 27
General Comments: FCOJ was sharply lower on continued forecasts for Hurricane Dorian to curve away from Florida and take a more northern track into the Carolinas. Chart patterns have turned mixed in response to the hurricane threat that appeared last week. Hurricane Dorian is expected to hit the US as a Category 4 major storm and could damage crops where the system lands. It was originally expected to hit central and southern Florida but later forecasts indicated that the system could curve north and just give a glancing blow to the state. The weather in Florida had been tranquil as the state has seen frequent showers and storms that have aided in development in the fruit. Inventories in Florida are still 17% above a year ago. Fruit for the next crop is developing and are as big as baseballs. Crop conditions are called good. Mostly good conditions are reported in Brazil.
Overnight News: Florida should get scattered showers. Heavy rain is possible in eastern coastal areas from the hurricane today. Temperatures will average near to above normal. Brazil should get mostly dry weather and near to below normal temperatures. ICE said that 0 notices were posted for delivery against September FCOJ contracts and that total deliveries for the month are now 0 contracts.
Chart Trends: Trends in FCOJ are mixed. Support is at 97.00, 95.00, and 92.00 September, with resistance at 105.00, 108.00, and 110.00 September.
General Comments: Both New York and London closed lower yesterday as the US Dollar worked higher against most major currencies and the Real worked lower. The Real seems poised to move lower but a lot will depend on if and when a comprehensive reform to Brazil public pensions is passed by the legislature there and signed into law. The trends started to turn down on the daily charts again yesterday. The buy side of the market has been generally quiet but there has been some demand. Offers from origin are not that hard to find. The market is starting to feel smaller crops from Brazil and Vietnam for the current harvest. It will expect bigger crops next year. Some think that Brazil could producer over 70 million bags next year. Demand has been increasing over the last few years on the consumer level, but production potential is growing faster. Producers in Brazil have the best chances to make money at current prices as they have more mechanized farming. Vietnam has more mechanization, too. The rest of the Coffee origin world will struggle due to more difficult growing terrain and higher costs of production. The weaker production this year should help to hold prices from going much lower.
Overnight News: ICE certified stocks are lower today at 2.329 million bags. The ICO daily average price is now 94.75 ct/lb. Brazil will get mostly dry conditions with near normal temperatures. Vietnam will see scattered showers and storms mostly in the north. ICE said that 89 notices were posted for delivery against September contracts and that total deliveries for the month are now 467 contracts.
Chart Trends: Trends in New York are mixed to down with objectives of 93.00 and 90.00 December. Support is at 94.00, 91.00, and 88.00 December, and resistance is at 98.00, 101.00 and 103.00 December. Trends in London are mixed to down with objectives of 1270 and 1220 November. Support is at 1290, 1260, and 1230 November, and resistance is at 1340, 1360, and 1370 November.
DJ Coffee Market to Register 5M-Bag Surplus in 2018-19 — Market Talk
1723 GMT – Coffee production will outpace consumption for the second year running when the season draws to a close this month, the International Coffee Organization says. The intergovernmental organization forecasts the 2018-19 season will record a surplus of 5M 60-kilogram bags. That would take the cumulative surplus over the past two seasons to 7M bags, ICO says, “which is one of the main explanatory factors for current low coffee-price levels.” Output in South America is expected to rise by 4.9% from 2017-18, to 81.1M bags. Since its August report, ICO has revised up its estimate of Brazilian output by just under a million bags to 63M bags. Arabica coffee futures have dropped 13% this quarter. (firstname.lastname@example.org)
General Comments: Futures rallied on news that world Sugar production could be 4.76 million tons less than demand in 2019-2020. The estimates were released by the ISO and were their first official look at the next marketing year. World supplies still appear ample for the demand potential. The ISO noted this fact and said that could mean plenty of Sugar for the world next year despite the weaker production. Reports from India indicate that the country still has a large surplus of White Sugar that probably must be exported. Processing of Sugarcane in Brazil is slower and the pace of the crush is behind last year. Mills are refining mostly for ethanol right now as has been the case all season. The fundamentals still suggest big supplies, and the weather in Brazil is good enough and India has improved to support some of the big production ideas. The weather has been much more uneven in production areas from Russia into western Europe. Those areas had a very hot and dry start to the growing season. Better weather was seen in early August then it turned hot and dry again. These areas need more rain and some cooler weather to provide better conditions for the final development of the Sugarbeets crops.
Overnight News: Brazil will get mostly dry weather. Temperatures should be near normal.
Chart Trends: Trends in New York are mixed to down with objectives of 1200, 1180, and 1170 March. Support is at 1200, 1170, and 1140 March, and resistance is at 1240, 1250, and 1270 March. Trends in London are mixed to down with objectives of 307.00 and 294.00 December. Support is at 310.00, 309.00, and 306.00 December, and resistance is at 317.00, 323.00, and 331.00 December.
DJ World Sugar Market to Fall into Deficit in 2019-20: ISO
By Joe Wallace
The world sugar market is on course to fall into its first deficit for three years but that may not be enough to push depressed prices higher, the International Sugar Organization said on Monday.
In its first full forecast for the 2019-20 crop cycle, which runs from October this year to next September, the intergovernmental organization said the world would produce just under 172 million metric tons of sugar.
That represents a fall of 2.4%, or 4.14 million tons, from the 2018-19 season. At the same time consumption is forecast to grow by 2.35 million tons, or 1.3%, to 176.74 million tons, leaving the global market in a deficit of 4.76 million tons.
However, the amount of sugar available on international markets is expected to grow “on the back of considerable releases of stocks,” the ISO said. “Thus, no shortages in physical supply to the world market are currently anticipated.”
Sugar prices have dropped in recent weeks, pushing benchmark raw-sugar futures prices in New York close to a decade low at 11 U.S. cents. The market was closed for Labor Day on Monday but white-sugar futures were up 1.1% at $305 a metric ton in London.
Driving the decline are expectations of strong exports from India, the world’s largest sugar producer last year, at the same time as some governments are seeking to discourage sugar consumption.
Although it forecast that demand for sugar will increase in the 2019-20 season, the ISO said the pace of growth would fall to 1.3% from a recent average of 1.8%.
This slowdown reflects “the impact of the ‘sugar and health’ debate and the wave of introductions of additional taxes on sugar-containing products,” as well as weakening population growth, the ISO said.
General Comments: Futures closed higher in both markets and the daily charts in London show that a short term uptrend is under way. The markets have acted weaker as the next main crop harvest comes closer to reality in West Africa. The weather in West Africa is still a feature. The weather in Ivory Coast has improved due to reports of frequent showers. Some showers in West Africa now help relieve stress on trees. Ideas are that the next crop will be good. The harvest will start in the Fall. Growing and harvesting conditions in Asia are also reported to be good. The harvest is ongoing amid showers, but good progress in the harvest is expected at this time. More and more Asian Cocoa has been staying at home and processed in Indonesia for export in the region. Demand in Asia has been growing and Indonesia has been eager to be the primary source of Cocoa.
Overnight News: Scattered showers and storms are expected in West Africa. Temperatures will be on both sides of normal. Malaysia and Indonesia should see showers. Temperatures should average above normal. Brazil will get mostly dry conditions and near to above normal temperatures. ICE certified stocks are lower today at 3.988 million bags. ICE said that 0 notices were posted for delivery against September contracts and that total deliveries for the month are now 2,118 contracts.
Chart Trends: Trends in New York are mixed. Support is at 2210, 2180, and 2170 December, with resistance at 2280, 2300, and 2340 December. Trends in London are mixed to up with objectives of 1770 and 1970 December. Support is at 1710, 1680, and 1670 December, with resistance at 1750, 1780, and 1800 December.