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 higher yesterday and made new highs for the move. The weekly charts still show bullish trends and ideas are that further price gains are coming. A catalyst for the rally has been the trade deal between the US and China. China has also been buying Cotton from the US and Brazil as it needs higher quality Cotton to blend with its domestic production. It will probably resume buying once the new trade deal is signed on January 15. USDA showed the production problems in its annual update and held demand strong. The report was considered bullish for futures. World data also showed reduced ending stocks and the world report was also considered bullish.
Overnight News: The Delta and Southeast should see frequent periods of precipitation through this weekend. Temperatures should be mostly above normal. Texas will have mostly dry conditions except for some rain on Thursday. Temperatures will average above normal. The USDA average price is now 67.07 ct/lb. ICE said that certified stocks are now 6,824 bales, from 8,824 bales yesterday.
Chart Trends: Trends in Cotton are up with objectives of 7150 and 7240 March. Support is at 7080, 7020, and 7000 March, with resistance of 7330, 7440, and 7500 March.

FCOJ
General Comments: FCOJ was lower. Overall chart patterns suggest that more price weakness is coming. Good growing conditions and increased oranges production estimates by USDA this season have been bearish. The weather has been great for the trees as there have been frequent periods of showers and no severe storms this year. Many areas have been dry lately and harvest is expanding. Crop yields and quality should be high for Florida this year. Inventories of FCOJ in the state are high and are more than 36% above last year.
Overnight News: Florida should get mostly dry conditions. Temperatures will average near to above normal. Brazil should get dry conditions through the weekend and near to above normal temperatures. ICE said that 0 notices were posted for delivery against January contracts and that total deliveries for the month are now 0 contracts.
Chart Trends: Trends in FCOJ are down with objectives of 95.00 March. Support is at 95.00, 92.00, and 89.00 March, with resistance at 98.00, 99.00, and 100.00 March.

COFFEE
General Comments: Futures were lower on news that a group of analysts contacted by Bloomberg had estimated Brazil production at almost 65 million bags. It was an enormous amount of Coffee and an amount that would refill coffers and allow for ample exports at the same time. The analysts cited good weather for the prediction. The weekly charts suggest that further price weakness is possible. Rains were reported in Brazil Coffee areas. The Brazilian crop is developing well but some exporters are out of previous crop supplies to sell. It is dry in other parts of Latin America. Central America has had less than normal rains, especially in Honduras. Peru is also too dry right now. The Asian harvest is underway but producers do not seem to be selling on ideas that prices are too low. Vietnam exports remain behind a year ago, but the market anticipates bigger offers with the Tet holiday drawing nearby. Vietnamese crops are expected to be big despite uneven growing conditions earlier in the year.
Overnight News: ICE certified stocks are higher today at 2.068 million bags. The ICO daily average price is now 110.56 ct/lb. Brazil will get showers this week and drier weather this weekend with near to above normal temperatures. Vietnam will see mostly dry conditions.
Chart Trends: Trends in New York are down with objectives of 105.00 and 100.00 March. Support is at 113.00, 110.00, and 106.00 March, and resistance is at 120.00, 123.00 and 125.00 March. Trends in London are down with objectives of 1310, 1280, and 1260 March. Support is at 1310, 1290, and 1270 March, and resistance is at 1370, 1390, and 1410 March.

SUGAR
General Comments: The markets closed higher on ides of less Asian production. Reports indicate that little is on offer from India. Thailand might also have less this year due to reduced planted area and erratic rains during the monsoon season. There is still more than enough Sugar for any demand and that India will have to sell sooner or later. Reports from India indicate that the country is seeing relatively good growing conditions and still holds large inventories from last year. However, these supplies are apparently not moving and this could be due to less government subsidy for mills and exporters. Thailand also has short crops from reduced planted area this year. Reports of improving weather in Brazil imply good crops there, but most of the cane is being used to produce ethanol. More rallies in Sugar prices are needed for the mills to switch back to producing Sugar for export.
Overnight News: Brazil will get scattered showers this week and drier weather this weekend. Temperatures should be near to above normal.
Chart Trends: Trends in New York are up with objectives of 1440 and 1450 March. Support is at 1370, 1340, and 1320 March, and resistance is at 1420, 1440, and 1460 March. Trends in London are up with no objectives. Support is at 376.00, 365.00, and 362.00 March, and resistance is at 386.00, 388.00, and 391.00 March.

DJ Brazil Center-South Sugar, Ethanol Output Drop as Harvest, Production Season Approaches End
By Jeffrey T. Lewis
SAO PAULO–Brazilian sugar mills in the country’s center-south region crushed less cane in the second half of December compared with a year earlier, according to industry group Unica.
Center-south mills crushed 734,000 metric tons of cane in the period, a decline of 71.2% from the same period a year earlier. They produced 13,000 tons of sugar, down 82.4%, and made 137 million liters of ethanol, a decrease of 35.7%.
Brazil is the world’s biggest sugar producer and exporter, and the center-south grows about 90% of the country’s cane. The harvest and production season is coming to an end, with only 31 mills still operating and producing ethanol, compared with 253 mills that had already closed down, according to Unica.
The production mix for the second half of December month was 14.4% sugar to 85.6% ethanol. A year earlier, the mix was 21.4% sugar and 78.6% ethanol.
In the season from April 1 through Jan. 1, mills in the region crushed 578.6 million tons of cane, up 2.9% from the same period a year earlier. Sugar production rose 0.5% to 26.5 million tons, and ethanol output rose 6.5% to 32.1 billion liters.
The production mix for the season through Jan. 1 was 34.5% sugar to 65.5% ethanol. A year earlier, the mix was 35.5% sugar and 64.5% ethanol.

COCOA
General Comments: Futures closed higher in both markets. Funds and other speculators were the best buyers. Harvest is now active in West Africa and reports are that good volumes and quality are expected. Ivory Coast said that arrivals are now 1.26 million tons, up 1.9% from last year. Ideas are that demand is currently very strong due to the current price action. The reports from West Africa imply that a big harvest is possible in the region. Ivory Coast arrivals are strong and are above year ago levels. The weather in Ivory Coast is good. The precipitation is a little less now so there are no real concerns about disease. Ideas are that the next crop will be very good.
Overnight News: Scattered showers and storms are expected in southern sections of 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 2.794 million bags.
Chart Trends: Trends in New York are up with objectives of 2670 and 2780 March. Support is at 2530, 2500, and 2470 March, with resistance at 2610, 2650, and 2670 March. Trends in London are up with objectives of 1900 and 1970 March. Support is at 1860, 1830, and 1810 March, with resistance at 1910, 1930, and 1950 March.

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