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
Tuesday, March 24, 2020
General Comments Cotton was lower last week and made new lows for the move on the weekly continuation charts and on the daily charts. Much of the selling was related to lost demand potential due to the Coronavirus and the extremely weak petroleum prices. The Coronavirus has the chance to hurt trade in Cotton between the US and China. Chinese buyers might need less Cotton now as factories inside their country were closed for an extended holiday. All are reopen now, but the manufacturing pace has been slow. China has also been slow to buy products from Southeast Asia and demand for US Cotton has been hurt in the entire region. The weakness in Petroleum futures comes from the moves by Saudi Arabia to ramp up production just at the time when the world economy is slowing down. The threat of a world-wide recession is very real. It also means that man-made fibers are that much cheaper than natural fibers. The strong US Dollar hurts trade anywhere and pushes buying to alternative growths like Brazil.
Overnight News: The Delta and Southeast should see scattered showers starting on Sunday. Temperatures should average near to below normal this weekend. Texas will have scattered showers on Sunday. Temperatures will average below normal. The USDA average price is now 46.97 ct/lb. ICE said that certified stocks are now 40,817 bales, from 41,404 bales yesterday.
Chart Trends: Trends in Cotton are down with no objectives. Support is at 5020, 4960, and 4900 May, with resistance of 5360, 5630 and 5800 May.
General Comments: FCOJ was higher on demand considerations here in the US and in South America. Industry sources suggest that demand has improved as consumers are returning to FCOJ due to the Coronavirus. The increased demand has really turned the market around. 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 so far this year. Many areas have been dry lately and irrigation is being used. Crop yields and quality should be high for Florida this year. Inventories of FCOJ in the state are high.
Overnight News: Florida should get mostly dry conditions. Temperatures will average above normal. Brazil should get scattered showers through the weekend and near to above normal temperatures.
Chart Trends: Trends in FCOJ are up with objectives of 111.00 May. Support is at 109.00, 108.00, and 10^.00 May, with resistance at 111.00, 113.00, and 115.00 May.
General Comments: Futures were higher in New York and unchanged to slightly higher in London. Support came from a lack of supply in Brazil at this time and on concern that previous bad growing conditions have hurt production potential in the Cerrado, home of about 10% of all Brazil production. Many producers and exporters have run out of Coffee in storage to sell. In addition, containers are bottled up in China and are increasingly hard to find for shipping in most Coffee exporter countries. The chart trends are up in New York and mixed in London due to big production ideas. Rains were reported in Brazil Coffee areas over the weekend and showers are continuing through this week. It is dry in other parts of Latin America. Central America has had less than normal rains, especially in Honduras. 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. Vietnamese crops are expected to be big despite uneven growing conditions earlier in the year. Growing conditions are uneven again this year as it is dry in many growing areas. The Real lost once again to the US Dollar Index and remains very cheap.
Overnight News: ICE certified stocks are lower today at 2.038 million bags. The ICO daily average price is now 112.13 ct/lb. Brazil will get scattered showers in Minas Gerais with near normal temperatures. Vietnam will see mostly dry conditions in the south and some light to moderate showers in the north.
Chart Trends: Trends in New York are up with objectives of 125.00 and 136.00 May. Support is at 116.00, 114.00, and 110.00 May, and resistance is at 125.00, 127.00 and 131.00 May. Trends in London are mixed. Support is at 1220, 1190, and 1150 May, and resistance is at 1250, 1270, and 1290 May.
General Comments: New York closed higher and London closed lower again due to uneven petroleum futures. Raw Sugar futures were also supported by the lack of container availability in Brazil for shipping. The same factor supported London White Sugar futures. The weaker petroleum futures make higher priced ethanol that much more expensive to blend and cuts demand. That makes more Sugarcane available for processing into Sugar. The Brazil mills are trying to cover the lack of White Sugar in the market. 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. Reports of good weather in Brazil imply good crops there. Farmers have been selling to mills but the harvest is now almost over so the supplies will start to tail off. Brazil mills continue to favor ethanol in the production mix, but current higher prices for Sugar make it economic for more processing to Sugar instead of ethanol at this time.
Overnight News: Brazil will get scattered showers mostly in Minas Gerais. Temperatures should be near normal.
Chart Trends: Trends in New York are mixed. Support is at 1070, 1030, and 1000 May, and resistance is at 1120, 1170, and 1210 May. Trends in London are mixed. Support is at 332.00, 329.00, and 326.00 May, and resistance is at 349.00, 352.00, and 354.00 May.
New York closed lower for the week and trends remain mixed to down. London closed higher and trends are mixed. Harvest is now over for the main crop in West Africa and the results so far are very good. Ideas are that demand is currently strong but less than before. 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 weather is too dry in Ghana and Nigeria and there are fears that the mid crop is not developing well at this time.
Overnight News: Mostly dry conditions are forecast for West Africa, but showers are possible in coastal areas. Temperatures will be above 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 higher today at 3.955 million bags.
Chart Trends: Trends in New York are mixed to down with no objectives. Support is at 2190, 2160, and 2130 May, with resistance at 2270, 2360, and 2400 May. Trends in London are mixed. Support is at 1800, 1780, and 1770 May, with resistance at 1890, 1930, and 1980 May.