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 closed lower again yesterday on follow through selling. Price trends turned down last week when futures broke through some short term support areas. Traders are worried about a global recession and demand in that recession. The late season weather in the Great Plains was better and the crop showed improvement. An increase in export volumes was noted by USDA because of the increased production, but the supply increase was bigger than the demand increase and ending stocks estimates increased. The harvest is coming, and the market is preparing for it with sideways to lower prices. The trade is still worried about demand moving forward due to recession fears and Chinese lockdowns but is also worried about total US production potential. It is possible that the continued Chinese lockdowns will continue to hurt demand for imported Cotton for that country and that a weaker economy in the west will hurt demand from the rest of the world.
Overnight News: The Delta and Southeast will get mostly dry conditions and above normal temperatures. Texas will have mostly dry conditions and above normal temperatures. The USDA average price is now 96.68 ct/lb. ICE said that certified stocks are now 4,552 bales, from 4,552 bales yesterday.
Chart Trends: Trends in Cotton are down with objectives of 9670 December. Support is at 94.40, 92.00, and 91.60 December, with resistance of 102.00, 106.00 and 108.40 December.

Crop Progress
Date 11-Sep 4-Sep 2021 Avg
Cotton Bolls Opening 59 49 46 51
Cotton Harvested 11 8 8 11
Crop Condition
Very Poor Poor Fair Good Excellent
Cotton This Week 17 22 28 29 4
Cotton Last Week 15 22 30 29 4
Cotton Last Year 1 7 28 51 13

FCOJ
General Comments: FCOJ was higher yesterday and trends turned up on the daily charts. The weather remains generally good for production around the world for the next crop. Brazil has some rain and conditions are rated good. It has been dry recently in Sao Paulo but apparently not dry enough to affect the trees or fruit all that much. Weather conditions in Florida are rated mostly good for the crops with some showers and warm temperatures. It has been dry in Brazil but showers are expected to develop over the next couple of weeks. Mexican areas are showing mixed trends, with dry weather in some northern areas but better weather to the south. FCOJ inventories are now 40.8% less than a year ago.
Overnight News: Florida should get scattered showers. Temperatures will average near normal. Brazil should get mostly dry conditions and near to above normal temperatures. ICE said that 0 notices were posted for delivery against September contracts and that total deliveries for the month are now 0 contracts.
Chart Trends: Trends in FCOJ are mixed to up with objectives of 184.00 and 194.00 November. Support is at 174.00, 169.00, and 167.00 November, with resistance at 182.00, 184.00, and 192.00 November.

COFFEE
General Comments: New York closed higher, and London was closed yesterday for the funeral of the Queen of England. Small offers in Arabica are reported from Brazil and the weather forecasts have turned a little drier, but showers are still in the forecast. There is a threat for a third year of La Nina which could negatively affect Coffee production again next year.. Robusta shipments were down sharply and overall, Coffee exports were less. There is concern that Brazil will produce less Coffee this year due to very dry conditions after early rains led to premature flowering. The forecasts call for some light and isolated to scattered showers in the region for this weekend. Vietnam has also been dry and wire reports from there indicate that production losses are likely. Demand for Coffee overall is thought to be less, but the cash market remains strong. There is less Coffee on offer from origin, with Brazil offering less and Central America and Vietnam offering less as well. The weather in Brazil is good for Coffee production and any harvest activities. Temperatures are mostly above normal in Brazil and conditions are mostly dry. The dry weather is raising some concerns about the next crop potential, but it is normally dry at this time of year.
Overnight News: ICE certified stocks are unchanged today at 0.532 million bags. GCA stocks are now 6.450 million bagds, from 6.223 million last month. The ICO daily average price is now 198.60 ct/lb. Brazil will get mostly dry conditions with near to above normal temperatures. Central America will get scattered showers. Vietnam will see scattered showers. ICE NY said that 0 contracts were posted for delivery against September futures and that total deliveries for the month are now 1,520 contracts.
Chart Trends: Trends in New York are mixed. Support is at 216.00, 211.00, and 210.00 December, and resistance is at 224.00, 231.00 and 234.00 December. Trends in London are down with objectives of 2120 and 2020 November. Support is at 2170, 2150, and 2100 November, and resistance is at 2230, 2270, and 2300 November.

DJ Brazil Cuts 2022 Coffee Estimate to 50.38M Bags on Bad Weather in 2021
By Jeffrey T. Lewis
SÃO PAULO–Brazilian crop agency Conab cut its estimate for the country’s production of coffee for this year, saying a series of bad weather events last year reduced productivity.
The country’s farmers will grow a total of 50.38 million bags of coffee this year, down from its May forecast of 53.43 million bags. That’s an increase from the 47.72 million bags produced in 2021, but down from the record 63.08 million bags in 2020.
Brazil’s coffee production works on a two-year cycle, with larger crops in even-numbered years then smaller crops in odd-numbered years as the plants “rest” and recover. Unusually cold weather and scant precipitation hit some important coffee-growing areas between June and September of last year, hurting the development of the plants and reducing production this year.
Conab said Tuesday that the South American country produced 32.41 million bags of arabica beans this year. That would be the smallest harvest for an even-numbered year since 2014, when the worst drought in decades slammed production of the variety. Conab’s new forecast for the 2022 arabica crop compares with the 31.42 million bags in 2021 and the record 48.74 million bags in 2020. In May the agency forecast a crop of 35.71 million bags for 2022.
Many Brazilian analysts say Conab’s estimates aren’t always the most accurate, but they’re an important data point for markets to analyze. The agency’s figures differ from some analysts and consultants, such as Rabobank, which earlier this month estimated 2022 production of 40.1 million bags of arabica coffee.
Brazilian consultancy Safras & Mercado last week said it expects an arabica crop of 35.2 million bags this year. Safras originally forecast 38.8 million bags, and even the latest estimate is likely to change, said analyst Gil Carlos Barabach.
“This month is when you normally have a lot of coffee being delivered, and there are a lot of growers saying they won’t have enough,” he said, adding that better numbers will only be available in October. “This year the whole cycle has been delayed because of last year’s bad weather. Processing has been delayed, deliveries are delayed.”
Brazil is the world’s biggest producer and exporter of the more sought-after arabica variety, and the second-biggest producer of robusta coffee, after Vietnam. The arabica crop is much more affected by the two-year growth cycle than the robusta crop.
Arabica beans are favored by most coffee drinkers because of their smoother, sweeter taste. Robusta, or conilon as the variety produced in Brazil is known, is more often used in blends, though there are also countries where the stronger flavor of the beans is favored by drinkers.
The robusta crop will reach 17.97 million bags, Conab said Tuesday, up from the May forecast of 17.72 million bags. Brazil grew 16.29 million bags of robusta coffee in 2021 and 14.31 million bags in 2020, according to the agency.
With the smaller arabica crop this year, and the larger robusta crop, many roasters are already changing their blends to include more of the latter variety. The increased demand for robusta has led to higher prices for the variety, but the price is still lower than arabica, said Safras’s Mr. Barabach.
“Roasters are using more robusta because it’s less expensive relative to arabica,” he said. “Even the ones that resist using robusta are adjusting.”

SUGAR
General Comments: New York was lower and London was closed yesterday for the Queens funeral. Reports from UNICA indicated increased cane processing and increased Sugar in the production mix at the expense of Ethanol. The New York market is worried about ethanol demand in Brazil will force mills down there to continue to produce more Sugar for export. The Brazilian president has lowered the fuel taxes in Brazil and this is squeezing the profit margins of the mills. The mills could produce much more Sugar over time due to the tax changes. The London market had been looking for increased White Sugar supplies from origin and now is more worried about demand after recent price strength. Indian exporters are waiting for the government to announce its export policy for the coming year and are not selling White Sugar. The government is expected to announce a first tranche of 5.0 million tons for the export market in the next few days.
Overnight News: Brazil will get isolated showers. Temperatures should average near to above normal. India will get isolated showers in eastern areas and near to above normal temperatures.
Chart Trends: Trends in New York are down with objectives of 1710, 1690, and 1610 March. Support is at 1760, 1740, and 1710 March and resistance is at 1790, 1830, and 1850 March. Trends in London are down with objectives of 410.00 and 485.00 December. Support is at 527.00, 520.00, and 517.00 December and resistance is at 534.00, 543.00, and 548.00 December.

COCOA
General Comments: New York was a little higher and London was closed yesterday for the funeral of the Queen. Ideas of big production and uncertain demand are still around but reports from Africa indicate that demand has improved lately. Trends are mixed in New York. Reports indicate that buyers of Cocoa have enough coverage for now and can afford to wait for lower prices to develop. Supplies of Cocoa are as large as they will be now for the rest of the marketing year. Reports of scattered showers along with very good soil moisture from showers keep big production ideas alive in Ivory Coast. Ideas are still that good production is expected from West Africa for the year. The weather is good for harvest activities in West Africa but the harvest should be winding down now. The weather is good in Southeast Asia. Ivory Coast arrivals are now 59,000 tons, up 9.2% from last year.
Overnight News: Isolated showers are forecast for West Africa. Temperatures will be near normal. Malaysia and Indonesia should see scattered showers. Temperatures should average above normal. Brazil will get mostly dry conditions and near normal temperatures. ICE certified stocks are lower today at 5.649 million bags.
Chart Trends: Trends in New York are mixed. Support is at 2360, 2320, and 2300 December, with resistance at 2400, 2430, and 2450 December. Trends in London are mixed to u[p with objectives of 1880 and 1920 December. Support is at 1840, 1820, and 1800 December, with resistance at 1880, 1900, and 1930 December.

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