Morning Softs Report 07/17/18

COTTON
General Comments: Cotton was slightly lower after trading both sides of unchanged. After the close, USDA released new crop progress and condition ratings. Crop progress was about average, but condition dropped again. US crop conditions are fading due to the extreme Texas weather. North Carolina and Oklahoma also showed big problems. Demand prospects are not as good as they were a couple of months ago because of the tariff war with China. Chinese tariffs against US Cotton have forced buyers in China to look to India. Forward sales have increased and prices there have held firm. Crop conditions are good in the rest of the Southeast as these areas have been a little drier. Texas now is hot and dry again. The weather is improving in India and China as monsoon rains are reported in India and as China has turned drier. The monsoon has started in southern and central India and rains are now moving into northwest India and Pakistan
Overnight News: The Delta and the Southeast will get showers today and tomorrow, then drier weather. Temperatures should be above normal today and near normal by Wednesday. Texas will see mostly dry conditions. Temperatures will be above too much above normal. The USDA average price is now 85.20 ct/lb. ICE said that certified stocks are now 31,217 bales, from 36,215 bales yesterday. ICE said that 0 delivery notices were posted against July contracts today and that total deliveries are now 792 contracts.
Chart Trends: Trends in Cotton are mixed to up with objectives of 9000 and 9450 December. Support is at 8630, 8450, and 8420 December, with resistance of 8930, 9000, and 9120 December.

Crop Progress
Date 15-Jul 8-Jul 2017 Avg
Cotton Squaring 72 59 69 70
Cotton Setting Bolls 31 21 25 24
Crop Condition
Very Poor Fair Good Very Good
Cotton This Week 10 18 31 34 7
Cotton Last Week 8 19 32 34 7
Cotton Last Year 1 9 30 46 14

FCOJ
General Comments: FCOJ was higher once again yesterday and the September contract closed at new highs for the move. It remains a weather market. There is nothing in the Atlantic to cause any concern for crops right now. Florida weather remains good and demand prospects remain poor, especially with the potential for lost Business with the EU. The tariff wars between the US and the EU are hurting export demand ideas. The EU imports a lot of FCOJ and these exports will most likely be hurt due to retaliation that will be made by Europe that included increased tariffs on US FCOJ. The only question is if FCOJ will be available in increased quantities from Brazil this year as production ideas there are down due to hot and dry growing conditions. Florida producers are seeing good-sized fruit, and work in groves maintenance is active. Irrigation is being used. Brazil could use more rain as Sao Paulo has been hot and mostly dry. The harvest there is active, but will start to wind down soon. Production is expected to be down significantly from last year.
Overnight News: Florida should get scattered showers each day. Temperatures will average near to above normal. Brazil should get mostly dry weather and near to above normal temperatures. ICE said that 0 delivery notices were posted against July contracts this morning and that total deliveries are now 400 contracts.
Chart Trends: Trends in FCOJ are mixed to up with objectives of 174.00, 176.00, and 179.00 September. Support is at 168.00, 165.00, and 163.00 September, with resistance at 171.00, 172.00, and 175.00 September.

COFFEE
General Comments Futures were a little higher in both markets in light to moderate trading interest. London remains the stronger market as concerns about the potential Vietnamese production continue. There is not much Robusta on offer in the world markets right now even though supplies in storage in Europe are very high. Arabica has been weaker due to the anticipated big harvest from Brazil. Brazil weather remains good for harvesting and as production is thought to be very big at around 60 million bags. The harvest is now entering its final stages. It has been dry in Vietnam, and there is little on offer from that origin as producers want to see how big the next crop will be and try to wait for higher prices. The Vietnamese producer is mostly waiting in vain as prices internally have been moving lower for the last few weeks. Robusta offers from Vietnam are still down and traders say internal supplies are tight due to a smaller than expected harvest last year. It remains mostly dry in Arabica areas of Brazil, and there is no rain in the forecast for the next week. Temperatures have been moderate to cold, but not cold enough to damage crops. Origin is still offering in Central America and is still finding weak differentials. Growing conditions are good.
Overnight News: Certified stocks are a little higher today and are about 2.047 million bags. GCA stocks were 6.844 million bags at the end of June, from 6.667 million in May and 7.294 million last year. The ICO composite price is now 106.55 ct/lb. Brazil will get mostly dry conditions. Temperatures should be near to above normal. Colombia should get isolated showers. Central America and southern Mexico should get showers. Vietnam will get showers.
Chart Trends: Trends in New York are mixed. Support is at 109.00, 107.00, and 106.00 September, and resistance is at 112.00, 115.00 and 118.00 September. Trends in London are mixed. Support is at 1660, 1640, and 1610 September, and resistance is at 1710, 1730, and 1750 September.

DJ Wet Weather Favors Uganda Coffee Crop — Market Talk
0816 GMT – Cloudy and drizzly conditions prevailing across Uganda are enhancing the maturing of coffee trees planted during the first half of the year in Africa’s No.1 exporter, says the state meteorological agency. The phenomenon, attributable to the flow of southerly cold winds across East Africa has led to a significant decrease in temperatures especially over south-western coffee growing regions. It’s a boost for the 208 million new coffee trees planted earlier this year as part of Uganda’s plans to hike annual coffee output fourfold to 20 million bags by 2025. But the cold weather has hampered coffee berry ripening and drying, hindering the ongoing harvest. Eight months coffee exports for 2017-18 season are down 1% to 2.95 million bags. (Nicholas.Bariyo@wsj.com;@Nicholasbariyo)

SUGAR
General Comments: Futures were higher in both markets. News from China of changes to its import System was through to be supportive to futures as imports from traditional suppliers could increase. Ideas of big world production are keeping the speculators from buying. Traders note dry conditions in Brazil, the EU, and Russia, but also note very good conditions in Thailand and India. Brazil producers are also worried about Cane production even with the rapid early harvest. Much of the early cane harvest in Brazil has been used to make ethanol. However, there is still a lot of Sugar in the world and the futures price action implies that there is enough movement right now to keep the market well supplied. The dry weather in much of Europe and in southern Russia near the Black Sea has hurt Sugar beets production potential in these areas. India is exporting Sugar again and has a large surplus to move. It could produce more than 35 million tons of Sugar in 2018-19. Conditions have improved in the last couple of weeks as monsoon rains have arrived. Thailand has produced a record crop and is selling.
Overnight News: Brazil will get dry weather. Temperatures should be near to above normal this weekend.
Chart Trends: Trends in New York are down with objectives of 1090 October. Support is at 1090, 1060, and 1030 October, and resistance is at 1140, 1160, and 1180 October. Trends in London are mixed to down with objectives of 328.00 and 316.00 October. Support is at 326.00, 323.00, and 317.00 October, and resistance is at 336.00, 340.00, and 346.00 October.

COCOA
General Comments futures were higher in both markets in early trading, then collapsed and forced a key reversal down on the daily charts for both exchanges. The EU grind data was strong at above 7% more than last year and should have been very positive for prices. The outlook for strong production in the coming year has been enough to keep the prices in a short-term range, but declining exports from Ivory Coast should provide some support. Exports are now 1.809 million tons, down 3% from last year, and there are reports that the quality of the Cocoa exported has declined as well. Ideas that current weather conditions are good for the next crops in West Africa continue. There have been reports of good rains throughout the region and big yields are possible. Showers and more seasonal temperatures have been seen in the last few weeks to improve overall production conditions in West Africa. Conditions also appear good in East Africa and Asia.
Overnight News: Scattered showers are expected in West Africa, but most main areas will be dry. Temperatures will average near to above normal. Malaysia and Indonesia should see frequent showers. Temperatures should average above normal. Brazil will get dry conditions and near to above normal temperatures. ICE certified stocks are lower today at 4.796 million bags. ICE said that 0 notices were posted against July contracts and that total deliveries for the month are now 132 contracts.
Chart Trends: Trends in New York are mixed to down with objectives of 2250 and 2050 September. Support is at 2380, 2340, and 2320 September, with resistance at 2450, 2520, and 2540 September. Trends in London are mixed to down with objectives of 1750, 1670, and 1540 September. Support is at 1740, 1710, and 1680 September, with resistance at 1790, 1810, and 1850 September.