Softs Report - Thursday, Aug. 27

COTTON
General Comments: Cotton closed higher and trends are still up on the daily charts. The market is concerned about damage to crops in the Delta from Hurricane Laura. West Texas weather remains detrimental for crop development as the region has been very dry and hot. The hot and dry weather extends north into Oklahoma and western Kansas. These regions might get helped from the hurricane. Export demand for US Cotton has been poor for the last few weeks but was improved last week. Demand has been soft for other exporting countries. Export demand is the primary demand for US Cotton so poor weekly sales means weak overall demand. The retail demand has been slow to develop due to Coronavirus restrictions. The US weather situation is mixed, with good rains noted in the Southeast and good conditions in the Midsouth. It has been very hot and dry in West Texas and farther to the north in the Great Plains and crops there are suffering.
Overnight News: The Delta will get some heavy showers and Southeast will get scattered showers. Temperatures should be near to above normal. Texas will have isolated showers this weekend. Temperatures will average near to above normal. The USDA average price is now 59.80 ct/lb. ICE said that certified stocks are now 6,465 bales, from 6,465 bales yesterday. USDA said that net weekly Upland Cotton export sales were 156,600 bales this year and 7,900 bales next year. Net Pima sales were 12,600 balers this year and 0 bales next year.
Chart Trends: Trends in Cotton are mixed to up with objectives of 6870 December. Support is at 6500, 6470, and 6400 December, with resistance of 6640, 6680 and 6730 December.

FCOJ
General Comments: FCOJ was a little lower but held its recent trading range. The Coronavirus is still promoting consumption of FCOJ at home. Restaurant and food service demand has been much less as no one is really dining out. Florida production prospects for the new crop were hurt by an extended flowering period, but the weather is good now with frequent showers to promote good tree health and fruit formation. Import demand to the US should be minimal as US prices remain below those of Europe. Brazil has been too dry and irrigation is being used. Some showers are in the region now to help in Sao Paulo.
Overnight News: Florida should get scattered showers. Temperatures will average above normal. Brazil should get dry conditions and near to below normal temperatures.
Chart Trends: Trends in FCOJ are mixed. Support is at 114.00, 111.00, and 109.00 September, with resistance at 120.00, 124.00, and 128.00 September.

DJ Florida Orange Production, Acreage Fall — Market Talk
07:48 ET – Florida orange production fell 6.3% to 67.3M boxes in the 2019-20 year, according to the USDA. Orange groves in the state covered 382,393 acres, down 2.6% from last year. Orange acreage has declined steadily for decades, as hurricanes and citrus greening have made it difficult for farmers. ([email protected])

COFFEE
General Comments: Futures were higher. Chart trends are still turning up. Roasters are still taking certified stocks off the exchange instead of buying at origin. Vietnam was dry during flowering time and is dry again. Rains are good now. Production ideas are lower. Brazil and Central America are reported to be having problems with shipping due to lock downs from the Coronavirus. The demand from coffee shops at other food service operations is still at very low levels. Consumers are still drinking Coffee at home. Reports indicate that consumers at home are consuming blends with more Robusta and less Arabica. The Brazil harvest is active.
Overnight News: ICE certified stocks are lower today at 1.307 million bags. The ICO daily average price is now 117.03 ct/lb. Brazil will get mostly dry conditions with near to below normal temperatures. Vietnam will see light to moderate showers. ICE said that 6 notices were posted for delivery against September futures and that total deliveries for the month are now 37 contracts.
Chart Trends: Trends in New York are mixed to up with objectives of 135.00 December. Support is at 120.00, 118.00, and 116.00 December, and resistance is at 125.00, 127.00 and 129.00 December. Trends in London are up with objectives of 1450 and 1490 November. Support is at 1400, 1380, and 1370 November, and resistance is at 1450, 1470, and 1490 November.

SUGAR
General Comments: New York and London were lower. Brazilian mills are producing more Sugar and less Ethanol this year due to reduced Ethanol demand according to CONAB. Ideas are that there is plenty of Sugar for the world market. Getting the Sugar moved is becoming more difficult with the widespread Coronavirus outbreak in both Brazil and India. Brazil appears to be exporting at a good pace. India is having trouble with exports even with a large Sugarcane crop, but futures indicate that the market is supplied with White Sugar now. Thailand might have less this year due to reduced planted area and erratic rains during the monsoon season. There are reduced flows from rivers from China to hinder irrigation of the crops.
Overnight News: Brazil will get dry conditions or isolated showers. Temperatures should average near normal.
Chart Trends: Trends in New York are mixed to down with objectives of 1230 and 1180 October. Support is at 1250, 1230, and 1180 October, and resistance is at 1300, 1330, and 1360 October. Trends in London are down with objectives of 342.00 October. Support is at 350.00, 347.00, and 345.00 October, and resistance is at 365.00, 368.00, and 371.00 October.

DJ Brazil Sugar Crush Up 8.3% in 1H August as Dry Weather Helps Harvest
By Jeffrey T. Lewis
SAO PAULO–Brazilian sugar mills in the country’s center-south region crushed more cane in the first half of August compared with a year earlier, as scant rain facilitated harvesting work, according to industry group Unica.
Center-south mills crushed 46.4 million metric tons of cane in the period, an increase of 8.3% from the same period a year earlier. They produced 3.2 million tons of sugar, up 51%, and made 2.3 billion liters of ethanol, a decline of 5.8%.
The center south’s mills are boosting output of sugar at the expense of ethanol this year because of a drop in demand for the alternative fuel due to a decline in economic activity related to the coronavirus pandemic.
The production mix for the first half of August was 47.7% sugar to 52.3% ethanol, compared with 35.7% sugar and 64.3% ethanol in the same period a year ago.
In the season from April 1 through Aug. 16, mills in the region crushed 373 million tons of cane, up 6% from the same period a year earlier. Sugar production rose 48.2% to 23 million tons, and ethanol output fell 6.4% to 16.8 billion liters.
The production mix for the season through Aug. 16 was 47% sugar to 53% ethanol, compared with 35.3% sugar and 65.7% ethanol in the same period a year ago.

COCOA
General Comments: New York and London closed lower. The current crop features strong production but there are worries about the next crop due to dry conditions in West Africa. Nigerian traders told the wire services last week that the Nigerian harvest will be delayed by at least a month due t dry weather keeping the pods and beans small and keeping the pods from developing normally. There are a lot of demand worries as the Coronavirus is not going away and could be making a comeback in the US. Europe is still trying to open its markets again but the Coronavirus is still around and consumers are reluctant to buy. 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 3.810 million bags. ICE said that 689 notices were posted for delivery today against September futures and that total deliveries for the month are now 752 contracts.
Chart Trends: Trends in New York are mixed to up with no objectives. Support is at 2470, 2460, and 2420 December, with resistance at 2510, 2530, and 2550 December. Trends in London are mixed. Support is at 1670, 1660, and 1620 December, with resistance at 1710, 1730, and 1750 December.