Softs Report 01/18/2024

COTTON
General Comments: Cotton closed mixed and near unchanged in consolidation trading yesterday. USDA released its annual production report and the latest batch of WASDE report on Friday. The production report from USDA was bullish to prices as a cut in harvested area led to decreased production of 121.41 billion bales despite increased yields. Ending stocks were trimmed to 2.90 million bales from 310 million in December even with a cut in demand. Export and residual demand were cut. World ending stocks levels showed increased stocks and this hurt the price action in Cotton on Friday. The US economic data has been positive, but the Chinese economic data has not been real positive and demand has been down. There are still many concerns about demand from China and the rest of Asia due to the slow economic return of China in the world market.
Overnight News: The Delta will get mostly dry conditions and much below normal temperatures. The Southeast will see scattered showers and much below normal temperatures. Texas will have mostly dry conditions and much below normal temperatures. The USDA average price is now 77.88 ct/lb. ICE daily certified stocks are now 1,949 bales, from 1,949 bales yesterday.
Chart Trends: Trends in Cotton are mixed. Support is at 80.60, 80.10, and 79.60 March, with resistance of 83.10, 83.30 and 83.80 March.

FCOJ
General Comments: FCOJ closed lower again yesterday on what appeared to be new selling from speculators as the downside price action continued. The moves imply that supply is finally getting bigger than demand and imply that consumer demand has dropped significantly in recent weeks. Prices have been moving lower on the increased production potential for Florida and the IUS and also in Brazil. There are no weather concerns to speak of for Florida or for Brazil right now. The weather has improved in Brazil with some moderation in temperatures and increased rainfall in the forecast for this week. Brazil got more than expected rains over the weekend. Reports of short supplies in Florida and Brazil are around but will start to disappear as the weather improves and the new crop gets harvested. Historically low estimates of production in Florida due in part to the hurricanes and in part to the greening disease that have hurt production, but conditions are significantly better now with scattered showers and moderate temperatures.
Overnight News: Florida should get scattered showers or dry conditions. Temperatures will average near normal. Brazil should get scattered showers and above normal temperatures. ICE said that 0 notices were posted for delivery against January futures and that total deliveries for the month are now 0 contracts.
Chart Trends: Trends in FCOJ are down with no objectives. Support is at 281.00, 272.00, and 261.00 March, with resistance at 302.00, 310.00, and 320.00 March.

COFFEE
General Comments: New York and London closed lower yesterday, with New York the leader as Robusta offers remain difficult to find. Brazil weather continues to improve for best Coffee production. Rains continued to fall in parts of Brazil Coffee areas and Vietnamese and Brazilian producers remain reluctant sellers. Brazil production areas are seeing some very beneficial rainfall this current week. Arabica and Robusta areas were affected by drought, but the current forecasts call for a lot of help in affected areas. Brazil weather remains uneven but is improving for the best crop production. Reports indicate that logistical problems remain to delay shipments from Brazil.
Overnight News: ICE certified stocks are higher today at 0.267 million bags. The ICO daily average price is now 173.16 ct/lb. Brazil will get mostly scattered showers with near normal temperatures. Central America will get mostly dry conditions. Vietnam will see scattered showers.
Chart Trends: Trends in New York are mixed. Support is at 179.00, 168.00, and 165.00 March, and resistance is at 185.00, 188.00 and 192.00 March. Trends in London are up with objectives of 3120 and 3350 Marcg. Support is at 2990, 2920, and 2820 March, with resistance at 3200, 3230, and 3260 March.

SUGAR
General Comments: New York and London closed lower yesterday but trends are still up on the daily charts. Reports indicate that logistical problems continue to plague Sugar shipments from Brazil.. Brazil weather forecasts call for dryness in the south and continued scattered showers in central and northern areas this week but szhowers in all areas starting this weekend. The market continues to see stressful conditions in Asian production areas but has noted that India has changed its Ethanol policy to make more Sugar available to the market. There are worries about the Thai and Indian production potential due to El Nino and talk that India could turn into an importer next year. Offers from Brazil are still active but other origins. are still not offering or at least not offering in large amounts except for Ukraine, and demand is still strong. Brazil ports are very congested, so shipment of Sugar has been slower.
Overnight News: Brazil will get rains in the south and scattered showers in the north. Temperatures should average above normal. India will get mostly dry conditions and below normal temperatures.
Chart Trends: Trends in New York are up with objectives of 2300 and 2480 March. Support is at 2190, 2120, and 2060 March and resistance is at 2310, 2400, and 2480 March. Trends in London are up with objectives of 692 March. Support is at 622.00, 612.00, and 620.00 March, with resistance at 668.00, 674.00, and 687.00 March.

COCOA
General Comments: New York was a little lower and London was a little higher in consolidation trading. The availability of Cocoa from West Africa remains restricted and projections for another production deficit against demand for the coming year are increasing. The harvest seems to be coming and demand could be a problem with the current very high prices. Traders are worried about another short production year and these feelings have been enhanced by El Nino that could threaten West Africa crops with hot and dry weather later this year. The main crop harvest is starting in parts of West Africa so the losses will become minor for now. Scattered to isolated showers are reported in the region now and the harvest is coming. Ideas of tight supplies remain based on more reports of reduced arrivals in Ivory Coast and Ghana continue,
Overnight News: Isolated showers are forecast for West Africa. Temperatures will be near normal. Malaysia and Indonesia should see scattered showers. Temperatures should average near normal. Brazil will get isolated showers and above normal temperatures. ICE certified stocks are higher today at 4.126 million bags.
Chart Trends: Trends in New York are up with objectives of 4570 and 4770 March. Support is at 4320, 4270, and 4230 March, with resistance at 4490, 4520, and 455a0 March. Trends in London are up with no objectives. Support is at 3630, 3570, and 3500 March, with resistance at 3780, 3810, and 3840 March.

DJ Asia 4Q Cocoa Grindings Fall 8.5%
By Mary de Wet
Asia’s cocoa-bean grindings fell 8.5% in the fourth quarter, according to the Cocoa Association of Asia.
Cocoa grindings for the last quarter of 2023 totaled 211,202 metric tons, compared with 230,806 tons a year earlier, the industry group said Thursday. Grindings fell 0.1% from the third quarter.
For 2023, grindings totaled 858,675 tons, the lowest amount since 2020 and down from 904,094 tons in 2022.
Grindings–the volume of cocoa beans processed into the butters and powders used to make chocolate–are often taken as a proxy for cocoa demand.
The CAA is a trade association that groups the major companies involved in cocoa bean trade and processing, warehousing and related logistical activities in the region.

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