Commodity Futures Trading

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Softs Commodities Report
By: Jack Scoville | May 18, 2022

COTTON
General Comments: Cotton was lower as the US Dollar worked lower and fears about demand returned. New crop months were down slightly as hot and dry conditions in the western Great Plains continue. It is also hot and dry in India and crops grown there are thought to be under stress as well. There are ideas that production potential is slipping further due to the hot and dry weather in West Texas and the rest of the western Great Plains. USDA estimated production for the coming year at 16.50 million bales and this was below trade expectations. USDA said that planted area was less than had been previously forecast due to the hot and dry weather in the western Great Plains. Chinese demand could become less due to the Covid lockdowns there. India will now try to increase imports as world and US Cotton is now lower cost to importers as import taxes have been removed, but prices for imported Cotton are still very high. Production of the next US crop is at risk now due to dry weather in general for the western Great Plains. China could be trimming imports due to Covid and has closed a number of cities as the Covid spreads through the nation. China has been buying even with the port closures and domestic difficulties caused by renewed Covid lockdowns.
Overnight News: The Delta will get mostly dry conditions and above normal temperatures 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 143.46 ct/lb. ICE said that certified stocks are now 1,088 bales, from 1,100 bales yesterday.
Chart Trends: Trends in Cotton are mixed to up with objectives of 153.20, 159.80, and 161.80 July. Support is at 146800, 146.60, and 145.00 July, with resistance of 152.00, 152.90 and 155.90 July.

FCOJ
General Comments: FCOJ was a little lower yesterday in consolidation trading and trends are mixed on the daily charts. A freeze is possible in center south parts of Brazil and Oranges production could be affected later this week. USDA increased its Florida and US production estimates by about 2 million boxes to 40.2 million boxes last week. USDA had been cutting production in previous estimates. The market is short Oranges and short juice production but is also worried about domestic demand destruction as pills are becoming cheaper again. The greening disease has taken its toll on the US crop and the previous Brazil crop was down significantly due to drought. The weather remains generally good for production around the world for the next crop. Brazil has some rain and conditions are rated good, but it is drier now and some tree stress could develop soon. Weather conditions in Florida are rated mostly good for the crops with some showers and warm temperatures.
Overnight News: Florida should get mostly dry conditions. Temperatures will average near to above normal. Brazil should get isolated showers and near normal temperatures. ICE said that 312 notices were posted for delivery against May futures and that total deliveries for the month are now 312 contracts.
Chart Trends: Trends in FCOJ are mixed. Support is at 170.00, 166.00, and 163.00 July, with resistance at 179.00, 182.00, and 187.00 July.

COFFEE
General Comments: New York and London closed higher on more forecasts for a Brazil freeze. London closed higher in sympathy with New York. It could freeze in at least Parana and crops could be damaged as much below normal temperatures are forecast for later this week. The export pace from Cecafe was 2.8 million bags, down 24% from the previous year. The Ukraine war is supporting ideas of less demand from Europe generally and Ukraine and Russia. Demand from China is thought to be less due to the war against Covid. Deliveries from Vietnam and Brazil Robusta are noted to be decreasing as the harvest is now complete, but selling was active in previous months. Indonesian offers are higher now after a slow start to the selling campaign due to plentiful stocks inside the country. Good growing conditions for the next crop in Brazil are still around but some regions could be turning too dry again. Colombian Coffee production is less this year after bad weather early in the growing season.
Overnight News: ICE certified stocks are lower today at 1.108 million bags. The ICO daily average price is now 200.72 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 delivery notices were tendered against May contracts and that total deliveries for the month are now 543 contracts.
Chart Trends: Trends in New York are mixed to up with objectives of 229.00, 232.00, and 240.00 July. Support is at 220.00, 217.00, and 209.00 July, and resistance is at 230.00, 233.00 and 237.00 July. Trends in London are mixed to up with objectives of 2160, 2240, and 2360 July. Support is at 2080, 2040, and 2010 July, and resistance is at 2130, 2140, and 2150 July.

SUGAR
General Comments: New York and London closed higher again yesterday with freezing temperatures possible later this week in Brazil. Sugarcane production could easily be affected in central-south areas.. The price action implies renewed demand for White Sugar has appeared in the world market. The US Dollar was much weaker yesterday and should have encouraged selling from producers and mills. Increased offers from India and Thailand are expected if the market rallies. Pakistan is also increasing its offers due to good crops there. All are primarily exporters of White Sugar while Brazil exports more Raw Sugar. Thailand expects to produce about 10 million tons of sugar this year, up 33% from last year. India said it could export more than 9.0 million tons of Sugar. Brazil mills are crushing for Ethanol at this time and not Sugar. The overall crush pace is down significantly due to mills being closed. The crush was down 19.7% last month at 23.8 million tons of cane and the production mix is now 35.4% Sugar and 64.6% Ethanol.
Overnight News: Brazil will get mostly dry conditions. 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 up with objectives of 2030 and 2100 July. Support is at 1980, 18940, and 1920 July and resistance is at 2040, 2050, and 2120 July. Trends in London are up with no objectives. Support is at 548.00, 542.00, and 536.00 August and resistance is at 560.00, 566.00, and 572.00 August.

COCOA
General Comments: New York was higher and London moved a little lower as the US Dollar was lower. The weather is good for harvest activities in West Africa. Current reports from Ivory Coast indicate that the weather is a good mix of sun and rain so a good midcrop production is expected. The weather is good in Southeast Asia. Ghana arrivals have been below year ago levels, but Ivory Coast arrivals are ahead of last year. Ivory Coast arrivals are now 1.770 million tons, down 3.2% from last year.
Overnight News: Scattered 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 to above normal temperatures. ICE certified stocks are lower today at 5.055 million bags.
Chart Trends: Trends in New York are mixed to up with objectives of 2650 July. Support is at 2460, 2410, and 2370 July, with resistance at 2570, 2620, and 2650 July. Trends in London are mixed. Support is at 1770, 1750, and 1740 July, with resistance at 1810, 1820, and 1840 July.

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