Softs Report - Tuesday, Dec. 7


General Comments: Cotton futures closed higher yesterday as demand concerns caused by the return of Coronavirus in Europe and the discovery of a new variant in Africa eased. The variant is expected to spread quickly but produce mild reactions.Traders were also getting ready for the next WASDE reports that will be issued on Thursday. Chart patterns are sideways. The move came despite a strong weekly export sales report. Demand has fallen off with the rally in the US Dollar but US prices are reported to be still well below those in China so strong demand is expected to continue, at least from that destination. News on Friday of lockdowns in Europe along with the discovery of a new variant in Africa hurt demand ideas and caused new selling.Trends are starting to turn down on the weaker demand ideas. Analysts say the Asian demand is still very strong and likely hold at high levels for the future.US consumer demand has been very strong as well despite higher prices and inflation. Good US production is expected.

Overnight News: The Delta and Southeast will get isolated to scattered showers and above normal temperatures. Texas will have mostly dry conditions with isolated showers possible on Friday and above normal temperatures. The USDA average price is now 104.44 ct/lb.ICE said that certified stocks are now 7,024 bales, from 4,200 bales yesterday.ICE said that 0 notices were posted for delivery against December contracts and that total deliveries for the month are now 10 contracts.

Chart Trends:  Trends in Cotton are down with no objectives. Support is at 10350, 10150, and 10040 March, with resistance of 10590, 10920, and 11080 March.

Photo by Jason Leung on Unsplash


General Comments: FCOJ was higher yesterday and trends are sideways. First swing targets were hit on Wednesday for the down move and the market has held those levels since then. Demand ideas were hurt here and around the world by the return of Covid induced lockdowns in Europe and the discovery of a new Covid variation in Africa. The variant seems to spread rapidly but produces mild effects so much of the concern has been lessened for now. The hurricane season is over and the chances for a damaging storm to hit the state of Florida are gone so speculators have gotten out of longs and got short. The weather remains generally good for production around the world. Brazil has some rain with more in the forecast and flowering is likely. Brazil production was down last year due to dry conditions at flowering time and then a freeze just before harvest. Weather conditions in Florida are rated mostly good for the crops with a couple of showers and near-normal temperatures.Mexican crop conditions in central and southern areas are called good with rains. Northern and western Mexico is rated in good condition.

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