Softs Report 01/11/19

COTTON
General Comments: Cotton was mixed in consolidation trading. Support came from talk of significant progress in the US-China trade war meetings held in Beijing this week. Ideas are that the dispute could be resolved by the March deadline or at least very close to that date. Selling came as no details were announced about the negotiations, and as no amounts or time frame for any ag purchases from the US were made public. The Indian crop remains smaller, but the US crop appears big enough to meet any and all of the demand that has been much reduced so far this year. World production and supplies are going still lower due to bad weather in the growing season for major producers around the world, including India, Pakistan, and Australia. Demand for US Cotton has been disappointing, as the weekly export sales reports have shown average demand at best since the start of the marketing year. China has not bought any US Cotton this year and has been active in other markets, especially India.
Overnight News: The Delta should get mostly dry weather and above normal temperatures, but more rain appears on Friday and Saturday. The Southeast will get drier weather until rain appears on Saturday. Temperatures should be near to below normal. Texas will have mostly dry weather through Thursday light rain on Friday, and a dry weekend. Temperatures will be near to above normal. The USDA average price is now 68.42 ct/lb. ICE said that certified stocks are now 124,587 bales, from 124,937 bales yesterday.
Chart Trends: Trends in Cotton are mixed. Support is at 7200, 7160, and 7060 March, with resistance of 7380, 7420, and 7650 March.

FCOJ
General Comments: FCOJ was lower as the weather in Florida remains very good and as the harvest pace remains active. The fruit is abundant, but arrivals to packing houses and processors are reported behind last year. Florida producers are seeing small sized to good sized fruit, and work in groves maintenance is active. Irrigation is being used in all areas. Packing houses are open to process fruit for the fresh market, and all processors are open in the state to take packing house eliminations and fresh fruit. Mostly good conditions are reported in Brazil, but producers are worried about the current hot and dry spell that could hurt development.
Overnight News: Florida should get some showers on Friday and the weekend, then dry weather. Temperatures will average near to below normal. Brazil should get mostly dry weather and above normal temperatures. ICE said that 1 notice was posted for delivery today and that total deliveries for the month are now 66 contracts.
Chart Trends: Trends in FCOJ are mixed to down with objectives of 122.00 January. Support is at 122.00, 120.00, and 117.00 January, with resistance at 126.00, 128.00, and 132.00 January.

COFFEE
General Comments: Futures were lower in New York and London was a little higher. Ag markets in general were weaker and Coffee could not escape the general selling interest. Cash markets were quiet. The Brazil crops are almost harvested, and production estimates still range as high as 63.7 million bags. It is a big crop and the main reason to see prices in New York as low as they are right now. Producers expect production to drop next year as it will be the off year  in the biennial cycle. El Nino remains in the forecast and Coffee areas in Brazil could be affected by drought that could hurt production even more. Many areas are dry now, and the forecast calls for more dry weather. Vietnam is active in its harvest and middlemen were said to be active buyers of the harvest at levels just above the industry. The harvest will wind down this month. Production in Vietnam is estimated less than 30 million bags due to uneven weather during the growing season.
Overnight News: Certified stocks are higher today and are about 2.465 million bags. The ICO composite price is now 102.47 ct/lb. Brazil will get mostly dry weather. Temperatures should be near to above normal. Colombia should get isolated showers. Central America and southern Mexico should get showers or dry conditions. Vietnam will get mostly dry weather.
Chart Trends: Trends in New York are mixed to up with objectives of 109.00 and 115.00 March. Support is at 103.00, 102.00, and 99.00 March, and resistance is at 106.00, 107.00 and 110.00 March. Trends in London are mixed. Support is at 1500, 1480, and 1470 March, and resistance is at 1560, 1610, and 1630 March.

SUGAR
General Comments: New York and London closed lower for one more day despite firmer world petroleum prices. Northwest India had been experiencing hot and dry weather that could cut yields. Industry sources told news wires that there is plenty of Sugar in the country to sell. There does not appear to be much buying interest, and the government there is now thinking of subsidizing ethanol production as a way to reduce the surplus. Dry conditions continue in northern Brazil, while the rains continue in the south. Conditions are mostly good in Ukraine. Very good conditions are reported in Thailand, but the next production could be less as farmers might switch to other crops due to low prices for Sugarcane.
Overnight News: Brazil will mostly dry weather in the north and showers in the south. Temperatures should be near to below normal.
Chart Trends: Trends in New York are mixed. Support is at 1250, 1220, and 1190 March, and resistance is at 1290, 1300, and 1320 March. Trends in London are mixed. Support is at 343.00, 340.00, and 339.00 March, and resistance is at 350.00, 351.00, and 354.00 March.

COCOA
General Comments: Futures closed a little higher in New York and mixed in London. Trends are still up in both markets, and the weekly charts still show that a significant up side move is possible. Daily charts show a consolidation pattern for the short term. It is a weather market due to the hot and dry conditions seen in West Africa. The outlook for more hot and dry weather has created some speculative buying. The main crop harvest is active in West Africa. Main crop production ideas for Ivory Coast and Ghana are being reduced, and ideas are increasing that the mid crop harvest will be much smaller than normal. The crop production estimates might become smaller due to Harmattan winds that could appear at any time and hot and dry conditions that have moved into West Africa. These conditions can take moisture out of the soil very rapidly and cause some very significant stress on the trees. Conditions appear good in East Africa and Asia. Demand is said to be improving as offers from the new harvest start to increase.
Overnight News: Mostly dry conditions are expected in West Africa. Temperatures will average 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 a little higher today at 3.467 million bags.
Chart Trends: Trends in New York are mixed. Support is at 2350, 2320, and 2290 March, with resistance at 2400, 2440, and 2480 March. Trends in London are mixed to down with objectives of 1690 and 1500 March. Support is at 1690, 1660, and 1590 March, with resistance at 1730, 1750, and 1770 March.

DJ Nigeria Cocoa Association Cuts 2018-19 Output Forecast Again
By Obafemi Oredein
Special to Dow Jones Newswires
IBADAN, Nigeria–The Cocoa Association of Nigeria has again lowered its cocoa production forecast for the 2018-19 season, citing weather issues.
Cocoa output is now expected at 260,000 tons compared with the 310,000 tons previously forecast, CAN president Sayina Riman said Thursday.
“The [cocoa crop] yield last year wasn’t as much as expected, it fell short of our projections,” Mr. Riman said, while commenting on talk of an early end to the season’s main crop cocoa harvest.
Prior to the latest downgrade, Mr. Riman had in September said output could be around 280,000 tons instead of the 310,000 tons originally expected due to heavy flooding on farms and an outbreak of black-pod disease.
Farmers and traders in Nigeria’s major cocoa-producing southwest in October said the main crop harvest was weak due to poor cocoa tree fruiting and climate problems, while CAN vice president Joshua Oyedele also said at the time that he thought the season’s low yield was connected to climate change.
With the final main crop harvest already underway, farmers and traders dashed any earlier hopes that the harvest would continue well into the new year–around March–because of last year’s later-than-usual rainfall in the southwest and southeast.
“Cocoa is virtually gone,” Mr. Oyedele said, while trader Johnbull Ewerami called the midwest harvest “poor and skeletal.”