Softs Report - Friday, June 12

COTTON
General Comments: Cotton closed a little lower on demand worries and in spite of deteriorating crop conditions in the Cotton Belt. USDA showed a sharp increase in ending stocks estimates in its world data. It made no real changes in its domestic supply and demand ideas. Export sales were sharply higher in the weekly USDA reports yesterday but got ignored due to the release of the supply and demand estimates and big weakness in the stock market due to worries about the economic recovery that could stall. There is concern that China will stop fulfilling its obligations in the Phase One trade deal due to ramped up US rhetoric on the Chinese response to the Coronavirus epidemic and now the unrest in Hong Kong. The world is starting to slowly recover from the Coronavirus scare and some stores are starting to open again after being closed for weeks. The retail demand has been slow to develop as many consumers got hurt economically due to stay at home orders during the height of the pandemic and have little disposable funds to spend on clothes. Demand will slowly improve but the industry should have plenty of supplies to work with in the short term.
Overnight News: The Delta will get mostly dry conditions and Southeast will get mostly dry conditions after showers today. Temperatures should be mostly below normal in the Delta and near to below normal in the Southeast. Texas will have dry conditions or isolated showers. Temperatures will average near to above normal. The USDA average price is now 55.48 ct/lb. ICE said that certified stocks are now 24,615 bales, from 22,026 bales yesterday.
Chart Trends: Trends in Cotton are mixed to up with objectives of 6670 and 6820 July. Support is at 5970, 5940, and 5930 July, with resistance of 6230, 6250 and 6340 July.

FCOJ
General Comments: FCOJ closed a little higher on follow through speculative buying tied to reduced Oranges production estimates from USDA. USDA is now forecasting a crop of less than 68 million boxes in Florida. Demand from grocery stores has remained strong in response to the increased consumer demand. Inventories in cold storage remain solid and should be showing a seasonal increase due to the harvest. There is increasing concern about the food service demand not improving even with the partial opening of the states. The weather in Florida is currently good for the crops. Southern areas are cooler and have seen more frequent showers. The tree condition is called good. The Valencia harvest is in full swing. Brazil has been dry and irrigation has been used.
Overnight News: Florida should get periods of showers. Temperatures will average near normal. Brazil should get dry conditions and near to below normal temperatures.
Chart Trends: Trends in FCOJ are mixed to up with objectives of 132.00, 13.400, and 141.00 July. Support is at 126.00, 124.00, and 123.00 July, with resistance at 132.00, 133.00, and 136.00 July.

COFFEE
General Comments: Futures were lower in New York and in London. Trends in New York have turned down as the Brazil harvest accelerates and London trends are sideways. London remains firmer than New York as Vietnamese producers still think prices are too cheap to sell into and as Indonesian producers have pulled back from the market for a while. New York is also feeling increasing harvest progress in Brazil even though May exports were down quite a bit. The demand from coffee shops and other food service operations is improving but is still at very low levels. Consumers are still drinking Coffee at home, but many smaller roasters are actively trying to unload green coffee already bought a there are only a few outlets for sales at this time. The logistics of moving Coffee from Central and South America remain difficult. Producers have had trouble getting workers to pick the cherries and mills and processors have had trouble getting workers to staff the plants. Shipping logistics have improved but many are still having trouble getting the Coffee to ports to move to consumer nations. The recent drop in certified stocks in New York suggests thqat Arabica prices are too cheap when compared to the cash market.
Overnight News: ICE certified stocks are lower today at 1.682 million bags. The ICO daily average price is now 98.91 ct/lb. Brazil will get some isolated showers with above normal temperatures. Vietnam will see light to moderate showers.
Chart Trends: Trends in New York are mixed to down with objectives of 91.00 and 86.00 July. Support is at 95.00, 92.00, and 89.00 July, and resistance is at 98.00, 100.00 and 102.00 July. Trends in London are mixed. Support is at 1180, 1150, and 1130 July, and resistance is at 1230, 1260, and 1280 July.

SUGAR
General Comments: New York and London closed lower partly on the back of much weaker petroleum prices and partly on fears of demand after the recent run to higher prices for White Sugar futures in London. White Sugar futures in London have been the strength of the market lately. The Brazil mills are producing Sugar but might switch back to producing ethanol soon if petroleum markets can recover and move higher. Reports indicate that little is on offer from India in part due to logistical and harvest problems caused by the Coronavirus. India is thought to have a very big crop of Sugarcane this year but getting it into Sugar and into export position has become extremely difficult. These problems should ease as the attack of the virus eases in the country. Thailand might also have less this year due to reduced planted area and erratic rains during the monsoon season. There are reduced flows from rivers from China as well.
Overnight News: Brazil will get a dry week or maybe isolated showers. Temperatures should average near to above normal.
Chart Trends: Trends in New York are mixed to up with objectives of 1310 and 1420 October. Support is at 1180, 1130, and 1120 October, and resistance is at 1260, 1290, and 1300 October. Trends in London are mixed. Support is at 384.00, 379.00, and 370.00 August, and resistance is at 398.00, 400.00, and 405.00 August.

COCOA
General Comments: New York and London closed sharply lower and trends are down in both markets for the short term. New York is showing a double top on the charts at about 2300 July. There are a lot of demand worries as the Coronavirus is not going away and could be making a comeback in the US. Harvest is now over for the main crop in West Africa and the results so far are very good. The reports from West Africa imply that a big harvest in the region. However, the Midcrop could be less due to dry weather earlier in the season. Arrivals are on a pace about the same as last year. Ideas are that Southeast Asia also has good crops.
Overnight News: Isolated to scattered showers are forecast for West Africa. Temperatures will be near 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 4.235 million bags. The midcrop is looking at good weather conditions in West Africa.