Cotton

General Comments: Futures were lower as Hurricane Nicholas threatened to bring some big rains to Cotton production areas in the Delta and Southeast. Futures were also lower as macroeconomic factors ruled just about all commodities markets. Traders were worried about the lack of an agreement to raise the debt ceiling in the US and also about Evergrande in China that might go bankrupt. More bolls are open now so there is a better chance for damage to or loss of fiber but so far the system has proven to be rather a mild event for Cotton production. The demand is expected to be strong from Asian countries as world economies recover from Covid lockdowns. Analysts say the demand is still very strong and likely to hold at high levels for the future. However, the expansion of the Delta variant has given pause to the better demand ideas due to fears of economies here and around the world starting to partially lock down again. Those fears were magnified yesterday by the debt crisis here and the Evergrande crisis in China. Production ideas are being impacted in just about all areas due to the weather extremes. It has been very hot in parts of Texas and the Delta and Southeast have had drenching rains at various times in the last couple of months. Even so, good US production totals are expected.

Image Source: Unsplash

Overnight News: The Delta will get isolated showers with some big rains possible in the south and near normal temperatures and Southeast will get isolated to scattered showers and near to above normal temperatures. Texas will have isolated showers or dry conditions and above normal temperatures. The USDA average price is now 85.77 ct/lb. ICE said that certified stocks are now 60,976 bales, from 60,976 bales yesterday.

Chart Trends: Trends in Cotton are down with objectives of 8880 and 8520 December. Support is at 8890, 8800, and 8590 December, with resistance of 9030, 9110 and 9180 December.

Crop Progress

• Date 19-Sep 12-Sep 2020 Avg
• Cotton Bolls Opening 48 36 56 53
• Cotton Harvested 9 5 10 11

Crop Condition

• Very Poor Poor Fair Good Excellent
• Cotton This Week 1 7 28 51 13
• Cotton Last Week 1 5 30 50 14
• Cotton Last Year 9 18 28 35 10

FCOJ

General Comments: FCOJ closed lower on less weather concerns, especially for Brazil but also for Florida and Mexico as these factors are now part of the market. Macroeconomic factors ruled just about all commodities markets. Traders were worried about the lack of an agreement to raise the debt ceiling in the US and also about Evergrande in China that might go bankrupt. A freeze hit Sao Paulo state several weeks ago and reports of significant losses are being heard. Weather conditions in Florida are rated mostly good for the crops with scattered showers and near normal temperatures. Mexican crop conditions in central and southern areas are called good with rains, but earlier dry weather might have hurt production. Northeastern Mexico areas are too dry, but the rest of northern and western Mexico are rated in good condition. Florida is in the middle of the hurricane season but the storms have missed the state so far and crop conditions are good.

Overnight News: Florida should get scattered showers. Temperatures will average near normal. Brazil should get mostly dry conditions and above normal temperatures. ICE said that 0 notices were posted for delivery against September contracts and that total deliveries for the month are now 0 contracts.

Chart Trends: Trends in FCOJ are mixed. Support is at 134.00, 130.00, and 128.00 November, with resistance at 146.00, 149.00, and 150.00 November.

Coffee 

General Comments: New York closed lower and London closed mixed yesterday as macroeconomic factors ruled just about all commodities markets. Traders were worried about the lack of an agreement to raise the debt ceiling in the US and also about Evergrande in China that might go bankrupt. Tight supplies available for export from origin was a supportive factor but was overwhelmed by the world economic problems. New York has found support from the lack of Coffee available in Brazil after recent extreme weather events. London is having trouble sourcing Coffee from Vietnam due to a shortage of containers to carry the Coffee out of the country. Prices in New York have been firm as the current Brazil harvest starts to wind down with smaller production but have been weaker since the freeze event. The damage from the Brazil freeze several weeks ago is apparent. Some trees were killed and will have to be replaced. Dry weather and warm temperatures are reported now. Scattered showers are now in the forecast for Southeast Asia. Good conditions are reported in northern South America and good conditions reported in Central America. Conditions are reported to be generally good in parts of Africa.

Overnight News: ICE certified stocks are slightly lower today at 2.164 million bags. The ICO daily average price is now 166.02 ct/lb. Brazil will get mostly dry conditions with above normal temperatures. Central America will get scattered showers. Vietnam will see scattered showers. ICE NY said that 0 contracts were tendered for delivery against September futures and that total deliveries for the month are now 1,077 contracts.

Chart Trends: Trends in New York are mixed. Support is at 182.00, 178.00, and 176.00 December, and resistance is at 189.00, 191.00 and 194.00 December. Trends in London are mixed to up with objectives of 2110, 2150, and 2170 November. Support is at 2130, 2100, and 2060 November, and resistance is at 2180, 2210, and 2240 November.

DJ Brazil’s Conab Cuts 2021 Total Coffee Crop Forecast to 46.88M Bags
By Jeffrey T. Lewis

SAO PAULO–Brazilian crop agency Conab cut its forecast for the country’s production of the arabica variety of coffee in 2021 after droughts in important producing regions damaged plants and reduced productivity.
Conab forecast a total 2021 coffee crop of 46.88 million 132-pound bags, compared with its May forecast for a harvest of 48.81 million bags. In 2020, the country grew a record 63.08 million bags.
Conab forecast an arabica crop of 30.73 million bags, down from its May forecast for a 2021 crop of 33.36 million bags. The new forecast would mean a decline of 36.9% from the record 48.77 million bags of arabica the country grew in 2020. The harvest for 2021 is in its final stages, Conab said.

Brazil has a two-year coffee growing cycle in which harvests are normally bigger in even-numbered years, then decline in odd-numbered years as the coffee plants recover. In 2019, Brazil’s coffee growers produced a total crop of 49.31 million bags, a record for an odd-numbered year, and grew 34.30 million bags of arabica.

Several coffee-growing states, especially Minas Gerais, suffered from scant and irregular rain and high temperatures during April and November of last year, hurting development of the plants and adding an additional negative effect on production compared with 2020.
Frosts in parts of Minas Gerais and neighboring Sao Paulo state in July and August also damaged coffee plants, but most of the impact of that bad weather will hit production next year, according to growers. Some growers groups have forecast the cold might cut output by 30% or more in 2022.

Brazil is the world’s biggest producer and exporter of coffee, growing about one-third of total world production. It’s the biggest grower of arabica coffee and the second-biggest producer of robusta, after Vietnam.

Brazil will produce a robusta crop of 16.15 million bags this year, up from the May forecast for 15.44 million bags. In 2020, Brazil grew 14.31 million bags and in 2019 produced 15.01 million bags. Robusta plants, as the name suggests, are more robust than arabica plants and so are less affected by the two-year cycle than arabica plants.

Sugar

General Comments: New York and London were both lower yesterday and the trends are mixed. Macroeconomic factors ruled just about all commodities markets. Traders were worried about the lack of an agreement to raise the debt ceiling in the US and also about Evergrande in China that might go bankrupt. There is talk of a squeeze developing as the market moves to September expiration. The reduced production potential from Brazil is still impacting the market. The ISO has noted that this will be the second year of deficit production for the world, in large part because of the Brazil freeze that cut production. Consumption of Sugar remains on the light side. Fears that Covid is coming back and could reduce economic activity and demand are still around. Thailand is expecting improved production.

Overnight News: Brazil will get mostly dry conditions. Temperatures should average above normal.

Chart Trends: Trends in New York are mixed. Support is at 1930, 1920, and 1890 March, and resistance is at 2000, 2030, and 2050 March. Trends in London are mixed. Support is at 496.00, 485.00, and 481.00 December, and resistance is at 505.00, 511.00, and 520.00 December.

Cocoa

General Comments: New York and London closed lower yesterday and trends are now mixed. Macroeconomic factors ruled just about all commodities markets. Traders were worried about the lack of an agreement to raise the debt ceiling in the US and also about Evergrande in China that might go bankrupt. Ivory Coast has stopped selling for the next crop on fears of less supplies. World economies are starting to reopen after Covid and the open economies are giving demand the boost. The weather has had below normal rains in West Africa and crop conditions are rated good for now but there is concern about the lack of rain. Drier weather will be beneficial for the harvest which will be underway soon. Some are forecasting less production in the coming year. Ivory Coast sources told wire services that the country has sold between 1.64 million and 1.66 million tons of Cocoa so far this season. This is considered a very big amount and there are concerns about Cocoa availability at origin moving forward. Cocoa arrivals in Ivory Coast are now 2.142 million tons, up 4.8% from last year.

Overnight News: Isolated to scattered showers are forecast for West Africa. Temperatures will be above 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 5.540 million bags.
Chart Trends: Trends in New York are mixed to down with objectives of 2520, 2420, and 2400 December. Support is at 2570, 2540, and 2520 December, with resistance at 2650, 2710, and 2740 December. Trends in London are mixed. Support is at 1800, 1780, and 1740 December, with resistance at 1840, 1850, and 1900 December.