Morning Grains - 10/26/16

COTTON
General Comments: Cotton futures were lower on speculative selling in anticipation of good crop progress. The weather in most production areas of the US is expected to be dry for an extended period and significant harvest progress is expected over the next couple of weeks. Ideas are that the harvest will mean significant selling from producers. Futures are now likely to test support at 6800 December and could move closer to additional support near 6700 and 6600 December. The market is now waiting for more demand news, but expects a big drop in the export sales report tomorrow after a very strong week last week. Ideas of crop losses in the Southeast are around, but ideas are that any losses in that region will be made up by better yields in the Delta and Texas. The weather has turned good. No rains are expected in Texas or into the Delta and Southeast. The crop should mature and be harvested as rapidly as possible. Pakistan is producing less this year due to smaller planted area and will import from India if the political situation between both countries will permit this. Prices are starting to move lower as the new harvest in India hits the market.
Overnight News: The Delta and the Southeast should get mostly dry weather. Temperatures should average above normal. Texas will see mostly dry weather. Temperatures will average above normal. The USDA average price is now 67.49 ct/lb. ICE certified stocks are now 26,393 bales, from 26,393 bales yesterday.
Chart Trends: Trends in Cotton are mixed to down with objectives of 6830, 6640, and 6370 December. Support is at 6800, 6680, and 6650 December, with resistance of 6910, 7020, and 7070 December.

FCOJ
General Comments: FCOJ was higher once again on speculative buying. The up trend is getting established once again. Less Florida production and also less production in Brazil keep the market well supported. There has not been that much selling interest as producers hold back. There are no storms forecast for Florida. Most forecasts call for dry conditions. Lower production is expected in the reports due to the greening disease. The Florida harvest will be starting, and prices could remain lower. Growing conditions this year have been good. Irrigation has been used. Fruit is starting to turn color in many parts of the state. Fruit sizes are reported to be variable. It has also been dry in Sao Paulo, but the state is getting showers now and flowering is being reported.
Overnight News: Florida should see dry weather and near to above normal temperatures. Brazil should get mostly dry weather and near to below normal temperatures.
Chart Trends: Trends in FCOJ are mixed to up with no objectives. Support is at 204.00, 201.00, and 197.00 November, with resistance at 209.00, 212.00, and 215.00 November.

COFFEE
General Comments: Futures in New York were sharply higher in sympathy with the continuing rally in Robusta futures in London and on reports of strong cash market prices in Brazil. London futures made new highs for the move yesterday and New York followed to new highs as well. The Brazil Robusta production will be low again, and Robusta prices are currently very high in the country. Arabica prices are feeling internal demand and are rallying as well. More Arabica is being kept for internal consumption now and less is available for export. Local roasters are adding more Arabica to blends to compensate for the small Robusta offer and high Robusta prices. Colombia is also exporting strong volumes. Most of the demand for Central American coffees has been for better quality beans from the 2015-16 crop. These coffees are getting low bids, but they are getting the best buying interest in months right now.
Overnight News: Certified stocks are lower today and are about 1.274 million bags. The ICO composite price is now 148.73 ct/lb. Brazil will get episodes of scattered showers this week and dry weather this weekend. Temperatures should average near normal Colombia should get scattered to isolated showers. Central America and southern Mexico should get mostly dry conditions. Temperatures should average near to above normal.
Chart Trends: Trends in New York are mixed to up with no objectives. Support is at 161.00, 159.00, and 157.00 December, and resistance is at 167.00, 170.00 and 173.00 December. Trends in London are up with objectives of 2150 November. Support is at 2110, 2080, and 2050 November, and resistance is at 2160, 2190, and 2220 November. Trends in Sao Paulo are up with no objectives. Support is at 193.00, 190.00, and 187.00 December, and resistance is at 199.00, 202.00, and 205.00 December.

SUGAR
General Comments: Futures closed lower after failing to make new highs for the move. However, the charts still show that the market can move higher once again. Chart based traders think that the current NY and London chart patterns look like a bull pennant formation. If so, the market could be sharply higher today. The longer term bullish fundamentals and ideas of potentially more ethanol demand due to higher petroleum prices seems to provide the most support. The demand still seems good enough to take on all world production, and forecasts for deficit production against demand continue. The demand seems best from the Middle East and north Africa. Chinese demand should be less as the government moves to sell supplies from storage. A smaller crop for Brazil due to uneven precipitation is still in the forecast, and there could be smaller crops coming from India and Thailand as well as those countries have suffered from uneven monsoon rains. Southeast Asia is getting good rains.
Overnight News: Brazil will get scattered showers this week and dry weather this weekend. Temperatures should average normal.
Chart Trends: Trends in New York are mixed to up with objectives of 2420, 2440, and 2600 March. Support is at 2270, 2240, and 2220 March, and resistance is at 2330, 2360, and 2390 March. Trends in London are mixed to up with objectives of 615.00 December. Support is at 596.00, 586.00, and 582.00 December, and resistance is at 608.00, 611.00, and 619.00 December.

COCOA
General Comments: Futures markets were higher, but remained within the recent trading range in New York. London was also higher and appears to be trying to move into a new leg higher on the daily charts. Demand prospects remain uneven. The US and Asian grind data for the quarter was positive. However, the European demand seen two weeks ago was not as strong as expected. The market is moving to the new crop, and the fundamentals are different. The weather in West Africa has featured a lot of rain, and West African production in the end should be stronger than the last couple of years due to the better rains that have supported tree growth and condition. There is talk that production and demand can show that production will be bigger than demand. The growing conditions in just about all major production areas have been better than in the previous year.
Overnight News: Scattered showers are expected in West Africa. Temperatures will average near to above normal. Malaysia and Indonesia should see scattered showers in all areas. Temperatures should average near normal. Brazil will get mostly dry conditions or light showers and near to above normal temperatures. ICE certified stocks are sharply higher today at 2.844 million bags.

Chart Trends: Trends in New York are mixed. Support is at 2680, 2630, and 2610 December, with resistance at 2750, 2790, and 2810 December. Trends in London are mixed to up with objectives of 2310, 2390, and 2450 December. Support is at 2230, 2210, and 2190 December, with resistance at 2280, 2290, and 2320 December.