Softs Report 01/23/19

COTTON
General Comments: Cotton was lower along with most of the US agricultural markets as a lack of progress in the government shutdown negotiations and in resolving the disputes with China hurt buying ideas. It appeared that speculators adopted a risk off mentality as they waited for new details of that the Trump administration plans to do going forward. Weak overall demand continues to impact the US market, but word of smaller supplies is providing the support. World production and supplies are going still lower due to bad weather in the growing season for major producers around the world, including India, Pakistan, and Australia. India and Pakistan are expected to import more Cotton this year to cover the short domestic production. China had problems with its growing weather, too, and has been forced to import a lot of Cotton this year. Demand for US Cotton has been disappointing. China has not bought any US Cotton this year and has been active in other markets, especially India. The US has had disputes this year with other major importers such as Turkey, and this could impact demand for the US. US prices are down and China might start to look at the US crop, but there have been worries about the quality of the US crop due to some extreme growing conditions in Texas and the Southeast over the Summer and Fall. Ideas are that the quality worries have kept some importers of US Cotton away from the market.
Overnight News: The Delta should get mostly dry weather and above normal temperatures, but more rain appears on Wednesday. The Southeast will get rain on Wednesday. Temperatures should be near to above normal. Texas will have mostly dry weather. Temperatures will be on both sides of normal. The USDA average price is now 68.88 ct/lb. ICE said that certified stocks are now 121,703 bales, from 123,799 bales yesterday.
Chart Trends: Trends in Cotton are mixed to up with objectives of 7590, 7700, and 7830 March. Support is at 7280, 7220, and 7200 March, with resistance of 7460, 7650, and 7720 March.

FCOJ
General Comments: FCOJ was a little lower yesterday but held at the low-end of the recent trading range. Trends are turning down on the daily charts and remain down on the weekly charts as fruit moves to processors and packers. The Oranges harvest is active in Florida as the weather is warm and mostly dry. The fruit is abundant, but arrivals to packing houses and processors are reported behind last year. Florida producers are seeing small-sized to good-sized fruit, and work in groves maintenance is active. Irrigation is being used in all areas. Packing houses are open to process fruit for the fresh market, and all processors are open in the state to take packing house eliminations and fresh fruit. Mostly good conditions are reported in Brazil, but the weather there is turning hot and dry again.
Overnight News: Florida should get dry weather except for a few showers on Thursday. Temperatures will average near to above normal through Thursday then near to below normal. Brazil should get mostly dry weather and above normal temperatures. ICE said that 0 notices were posted for delivery today and that total deliveries for the month are now 67 contracts.
Chart Trends: Trends in FCOJ are mixed to down with objectives of 116.00 March. Support is at 117.00, 114.00, and 111.00 March, with resistance at 123.00, 124.00, and 126.00 March.

COFFEE
General Comments: Futures were lower on what appeared to be speculative selling tied to global economic fears and a general risk off mentality. The Real was lower in response to the Bolsonaro speech in Davos. Brazil should be getting past the gut slot of its harvest, and the strong export pace from the country should start to turn down. Brazil had a big production year for the current crop, but the next crop should be less as it is the off-year for production. Ideas are that the current production of 62 or 63 or more million bags can become about 52 million bags next year. Many areas are dry now, and the forecast calls for more dry weather. This is great for the harvest, but bad for the production prospects for next year. Vietnam is active in its harvest. Production in Vietnam is estimated less than 30 million bags due to uneven weather during the growing season, but London is lower, anyway, as it absorbs harvest and speculative selling.
Overnight News: Certified stocks are higher today and are about 2.484 million bags. The ICO composite price is now 100.96 ct/lb. Brazil will get mostly dry weather until scattered showers appear on Friday. Temperatures should be near to above normal. Colombia should get isolated showers. Central America and southern Mexico should get showers or dry conditions. Vietnam will get mostly dry weather.
Chart Trends: Trends in New York are mixed to up with objectives of 109.00 and 115.00 March. Support is at 103.00, 100.00, and 99.00 March, and resistance is at 106.00, 107.00 and 110.00 March. Trends in London are mixed. Support is at 1520, 1500, and 1480 March, and resistance is at 1560, 1610, and 1630 March.

DJ ECF Signals Slip in European Coffee Stock
By David Hodari
European coffee stocks fell in both October and November, moving to their lowest level in six months, the European Coffee Federation said Tuesday.
By the end of November, European stocks dropped by 2.1% to 688,573 metric tons from 703,368 tons in September, the data shows.
The total amount of beans held at the six major European coffee ports that the ECF tracks–Antwerp in Belgium, Barcelona, Hamburg, Le Havre in France and Trieste and Genoa in Italy–hit its lowest level since May 2018 having reached highs of more than a year in September.
The data revealed inventory falls over the two-month period at all ports except Antwerp–the port with the highest stock.

SUGAR
General Comments: Both markets moved a little lower yesterday, but held inside the recent trading range. It looked like speculators reacted to the lack of progress in the US Government shutdown and the US-China trade talks and decided to liquidate positions. The Brazilian Real traded lower in response to a speech at Davos by President Bolsonaro. Brazil is producing less Sugar this year as prices are not good enough for the mills. Brazil has been using a majority of its Sugarcane harvest to produce ethanol this year. There are doubts on just how much production will be seen this year in India. Northwest India had been experiencing hot and dry weather that could cut yields. It has not announced a reduction in its export goal of 5.0 million tons this year, but it appears that the country will not export nearly that much. Dry conditions continue in northern Brazil and there are frequent rains in Rio Grande do Sul. Very good conditions are reported in Thailand, but the next production could be less as farmers might switch to other crops due to low prices for Sugarcane.
Overnight News: Brazil will mostly dry weather in the north and showers in the south. More widespread showers are likely on Friday. Temperatures should be near to above normal.
Chart Trends: Trends in New York are mixed to up with objectives of 1340 March. Support is at 1260, 1250, and 1230 March, and resistance is at 1310, 1330, and 1350 March. Trends in London are mixed. Support is at 348.00, 345.00, and 341.00 March, and resistance is at 355.00, 361.00, and 371.00 March.

COCOA
General Comments: Futures closed lower and made new lows for the move yesterday as speculators liquidated long positions. The weather forecasts are calling for a few showers in West Africa, and the Harmattan winds do not seem to be developing. In fact, El Nino seems to be fading, and El Nino can cause hot and dry weather in West Africa and in other tropical areas. The outlook for strong production in the coming year is still around, and ports are said to have plenty of Cocoa on offer. The main crop harvest is active in West Africa. Main crop production ideas for Ivory Coast and Ghana are being reduced, with Ivory Coast now estimating its main crop production at 1.985 million tons, down from previous estimates just over 2.0 million tons. Harmattan winds are mostly north of the main Cocoa growing areas. Conditions appear good in East Africa and Asia. Demand is said to be improving as offers from the new harvest start to increase.
Overnight News: Mostly dry conditions are expected in West Africa. Temperatures will average 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 lower today at 3.415 million bags.
Chart Trends: Trends in New York are down with objectives of 2180, 2100, and 2050 March. Support is at 2220, 2200, and 2150 March, with resistance at 2260, 2310, and 2370 March. Trends in London are down with objectives of 1640 and 1500 March. Support is at 1590, 1580, and 1560 March, with resistance at 1670, 1680, and 1700 March.