Softs Report - Monday, June 1

COTTON
General Comments: Cotton was about unchanged last week. Support is coming from improved demand for US Cotton, but this demand has started to fade. Export sales were poor last week. 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. Temperatures should be mostly above normal. Texas will have dry conditions or isolated showers. Temperatures will average near normal. The USDA average price is now 53.16 ct/lb. ICE said that certified stocks are now 8,172 bales, from 6,732 bales yesterday.
Chart Trends: Trends in Cotton are mixed. Support is at 5760, 5710, and 5680 July, with resistance of 5850, 5940 and 5980 July.

FCOJ
General Comments: FCOJ was higher in the first part of the week and then moved lower for the second half of the week. Significant long liquidation from speculators was seen on Friday and also perhaps some new selling from industry. Trends are still mostly up in the market. Support is coming from the continued effects from the Coronavirus that are keeping people at home and drinking Orange Juice. Demand from grocery stores has remained strong in response to the increased consumer demand. Oranges production was estimated as less in the latest USDA reports at below 70 million boxes, so supplies available to the market are somewhat reduced. Inventories in cold storage remain solid so there will be FCOJ to meet the demand. 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 cool and have seen a few showers. The Valencia harvest is in full swing. More signs of growth on trees are reported. 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 down with objectives of 121.00 July. Support is at 121.00, 120.00, and 117.00 July, with resistance at 125.00, 128.00, and 130.00 July.

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