Softs Report - Tuesday, May 26
COTTON
General Comments: Cotton was a little lower last week after failing to hold above the previous week's highs. Support is coming from improved demand for US Cotton, but this demand has started to fade. Export sales were nothing more than average 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 hope that consumer demand for Cotton products will quickly return is not likely to be confirmed. Consumers have really been hurt economically due to stay at home orders imposed here and overseas and it will take some time for them to recover. As an example, Chinese stores have been open for several weeks but there has been no consumer rush to go to them and buy. The same is possible here and in Europe although the data so far is mixed in this regard. It is too dry in Brazil for the good growth of the second crop of Cotton.
Overnight News: The Delta will get periods of scattered showers and isolated showers and Southeast will get scattered showers. Temperatures should be mostly near to above normal. Texas will have scattered showers. Temperatures will average near to above normal. The USDA average price is now 53.18 ct/lb. ICE said that certified stocks are now 6,693 bales, from 5,830 bales yesterday.
Chart Trends: Trends in Cotton are mixed to up with objectives of 6190, 6670, and 8910 July. Support is at 5740, 5680, and 5640 July, with the resistance of 5980, 6050 and 6100 July.
FCOJ
General Comments: FCOJ was higher for the week after making new highs for the move. Trends are still up in the market. Support is coming from the continued effects from the Coronavirus that are keeping people at home and drinking Orange Juice in any form. Demand from grocery stores has remained strong in response to 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 foodservice demand not improving even with the partial opening of the states. The weather in Florida has become much better for the crops. Southern areas are cooler now and have seen a few showers. The midseason Oranges harvest is diminishing. The color break is reported on late variety of Oranges. More signs of early bloom and new growth on trees are reported. Favorable weather is reported in Brazil but it has been dry and irrigation has been used.
Overnight News: Florida should get frequent periods of showers. Temperatures will average near normal. Brazil should get scattered showers and near-normal temperatures. ICE said that 0 notices were posted for delivery against May contracts and that total delivery for the month are 0 contracts.
Chart Trends: Trends in FCOJ are up with objectives of 132.00 July. Support is at 123.00, 121.00, and 120.00 July, with resistance at 128.00, 130.00, and 133.00 July.
COFFEE
General Comments: Futures were lower in New York and higher in London. New York was lower on depressed consumer and roaster demand in the US and Europe. The demand from coffee shops and other foodservice operations has dropped to almost nothing. 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. This might change a bit in the next few weeks as the US and EU economies slowly open up. 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 somewhat, but many are still having trouble getting the Coffee to ports to move to consumer nations. Vietnamese producers are not selling due to the weaker prices paid currently and the effects of the Coronavirus. Indonesian producers are more active sellers.
Overnight News: ICE certified stocks are unchanged today at 1.790 million bags. The ICO daily average price is now 103.82 ct/lb. Brazil will get scattered showers on Saturday and Sunday after a dry week with near to above normal temperatures. Dry and cool conditions next week. Vietnam will see light to moderate showers.
Chart Trends: Trends in New York are down with objectives of 1091.00 and 96.00 July. Support is at 102.00, 98.00, and 95.00 July, and resistance is at 105.00, 107.00 and 109.00 July. Trends in London are mixed to up with objectives of 1210, 1230, and 1320 July. Support is at 1190, 1170, and 1150 July, and resistance is at 1220, 1240, and 1260 July.
SUGAR
General Comments: New York and London closed higher with London once again leading the way. Crude Oil and product prices were higher on the week in recovery trading. The recently weaker petroleum futures had made higher-priced ethanol that much more expensive to blend and cuts demand. Prices in petroleum futures remained generally firm last week but still have a long way to go before Ethanol processing becomes profitable again. That makes more Sugarcane available for processing into Sugar in Brazil. The Brazil mills are trying to cover the lack of White Sugar in the market. Reports indicate that little is on offer from India in part due to logistical and harvest problems caused by the Coronavirus. 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 scattered showers on Saturday and Sunday after a dry week. Temperatures should average near to above normal. Dry and cool conditions on tap for next week.
Chart Trends: Trends in New York are mixed. Support is at 1070, 1040, and 1020 October, and resistance is at 1130, 1160, and 1180 October. Trends in London are mixed to up with objectives of 408.00 August. Support is at 360.00, 358.00, and 347.00 August, and resistance is at 371.00, 387.00, and 396.00 August.
Disclaimer: Past results are not necessarily indicative of future results. Investing in futures can involve substantial risk of loss & is not suitable for everyone. Trading foreign exchange also ...
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