COTTON

General Comments: Futures were lower much of the day as traders liquidated positions in response to the FED announcements and new data from China that showed that its manufacturing index contracted for the third month in a row. The FED announcement that it would buy longer dated bonds and sell near dated notes was as expected, but after the announcement the dollar rallied sharply and stock markets went sharply lower. Traders were worried once again about the Greek and European debt crisis and what it could do to demand. No one seems all that worried about production here or around the world as it seems that world economies remain in trouble. Chart trends are turning down for the short term with the price action yesterday. Demand remains soft with a lot of export competition around. However, Chinese demand could start to increase soon as the government there is releasing new low tariff import quotas. Dry weather in Texas is less of a factor now that the harvest is moving forward, and Delta and Southeastern areas will welcome drier conditions although showers are in the forecast.

Overnight News: The Delta and Southeast will get mostly dry conditions, but showers are possible late this weekend. Temperatures will trend to near to above normal this week, but near to below normal on Friday. Texas will be mostly dry. Temperatures will average near to below normal, then near to above normal this weekend. The USDA average spot price is now 94.42 ct/lb. ICE said that certified Cotton stocks are now 0.028 million bales, from 0.028 million yesterday. USDA said that its weekly world market Upland Cotton price is now 96.71 ct/lb.

Chart Trends: Trends in Cotton are down with objectives of 95.00 October. Support is at 95.00, 94.00, and 90.00 October, with resistance of 101.00, 105.00, and 107.00 October.

DJ USDA Cotton Ginnings For Period Ending Sep 15-Sep 23
Cotton Ginnings: Running Bales Ginned (Excluding Linters)
As of September 15, Crop Years 2008-2011
by Crop, State, and United States
==========================================================================
Crop and State Running bales ginned
——————————————————-
2008 2009 2010 2011
==========================================================================
All cotton
AL – – 11,100 1,400
AZ 1/ 4,250 1/ 5,800
AR 1/ – 54,050 650
CA – – – –
FL – – 1/ –
KS 1,250 – 9,750 1,450
GA (NA) (NA) (NA)
LA 4,450 5,850 66,100 63,450
MS – 1/ 60,250 5,700
MO – – 4,450 –
NM – 1/ – –
NC – – 3,100 2,450
OK – – – –
SC – – – 1,150
TN – – 11,800 1/
TX 465,050 164,400 521,550 1,012,450
VA – – – –
US 475,550 174,550 747,200 1,094,750
Amer-Pima
AZ – – – 1/
CA – – – –
NM – – – –
TX – – – –
US – – – 1/
==========================================================================
1/ Withheld to avoid disclosing data for individual gins.

FCOJ

General Comments: Futures closed sharply lower yesterday in response to fears about world economic conditions and on Florida weather. Traders were selling all commodities after the FED noted weak domestic and world economic conditions and after China said that its manufacturing index contracted for the third month in a row. Traders are looking for news, but right now the weather is good and there is no other news around. Florida has had good weather so far this year with showers most days and warm prices appear to be in a range. Florida has seen scattered showers and storms and warm temperatures, and there are no tropical systems in sight that look ready to move into the state. Brazil is seeing warm temperatures and mostly dry conditions.

Overnight News: Florida weather forecasts call for widely scattered showers and storms. Temperatures will average near normal. ICE said deliveries were 0 contracts today and now total 599 contracts for the month.

Chart Trends: Trends in FCOJ are mixed to down with objectives of 155.00 and 147.50 November. Support is at 155.00, 154.00, and 153.00 November, with resistance at 162.00, 165.00, and 167.00 November.

COFFEE

General Comments: Futures were sharply lower yesterday on demand fears and the FED announcements. The FED announcement that it would buy longer dated bonds and sell near dated notes was as expected, but after the announcement the dollar rallied sharply and stock markets went sharply lower. China said that its manufacturing index contracted for the third month in a row, and this created additional selling in commodities. The lack of offer in physical markets is still important, with no one really selling that much. Differentials in all of Latin America remain strong. There is some fear there that the Brazil production will not be as big as some of the huge production estimates floating around. Some say Brazil could produce 60 million bags this year. Producers there remain concerned due to a cold and dry Winter until now. The cold is gone, but it is till dry in Coffee areas. Rain is needed for flowering there. Central America and Colombia can only sell new crop as the old crop appears sold out. Weather in Brazil is good at this time. Warm temperatures and dry conditions are likely into next week in Brazil. Better weather is reported in Mexico and Central America as rains are more like normal. Chart trends are down for the short term in all markets.

Overnight News: Certified stocks are slightly higher today and are about 1.437 million bags. The ICO composite price is now 199.63 ct/lb. Brazil should see mostly dry weather this week and some rain this weekend. Temperatures will average above normal. Vietnam exported 30,000 tons of Coffee in September, down 16.7% from last year. Year to date exports are now 1.16 million tons.

Chart Trends: Trends in New York are down with objectives of 249.00 and 238.00 December. Support is at 252.00, 249.50, and 241.50 December, and resistance is at 256.00, 263.00, and 265.00 December. Trends in London are down. Support is at 1995, 1950, and 1930 November, and resistance is at 2050, 2055, and 2090 November. Trends in Sao Paulo are down with no objectives. Support is at 309.00, 304.00, and 297.00 December, and resistance is at 320.00, 323.00, and 330.00 December.

SUGAR

General Comments: Futures closed sharply lower in liquidation trading in response to the FED announcements and new Chinese data that showed its manufacturing index contracted for the third month in a row. The FED announcement that it would buy longer dated bonds and sell near dated notes was as expected, but after the announcement the dollar rallied sharply and stock markets went sharply lower Traders were talking about the European crisis and less demand potential, and supplies and offers are likely to increase soon. India could produce less than expectations and that the export program will not be strong. Thailand has a lot for export as well, and Brazil is expected to be a strong producer next year after a disappointing year this year. Bears keep pointing to increased supplies around the world and no demand this year from India as reasons to see futures move lower over time. Northern hemisphere crops are coming soon and will help offset the smaller production in Brazil. Some talk was seen on the wires that a lack of investment in production in Brazil could keep production there down for the next few seasons. Chart trends are down.

Overnight News: Mostly dry conditions are expected in Brazil. Temperatures should be near to above normal. Russia has produced 928,000 tons of Sugar from beets so far this year.

Chart Trends: Trends in New York are down with objectives of 2550 March. Support is at 2530, 2460, and 2360 March, and resistance is at 2640, 2720, and 2730 March. Trends in London are down with no objectives. Support is at 632.00, 625.00, and 620.00 December, and resistance is at 646.00, 657.00, and 667.00 December.

COCOA

General Comments: Futures were lower in New York and a little lower in London yesterday on currency considerations and world economics. Cocoa keeps flowing and as end users seem to be covered. Origin was said to be the best seller, but commercial buying was noted as well. Ideas of good supplies from Western Africa keep the selling pressure around. Trends are down on the charts. For now there is still no real reason to buy except for a temporary shortage as farmers in many countries wait for prices to rally. Next year could be different as many analysts say that crop production potential in western Africa has been hurt by some poor weather seen in the last month. However, current supplies are ample and should help cover any short production potential for next year. Weather is called good for production in West Africa now.

Overnight News: Scattered showers and storms are expected in West Africa. Temperatures will average near normal. ICE stocks are lower today and are now about 3.983 million bags. ICE said that Cocoa deliveries are 0 contracts today and now total 13 contracts for the month. Rain has suspended Cocoa harvesting in Nigeria for now. Ghana purchases are 9,266 tons this week.
Chart Trends: Trends in New York are down with no objectives. Support is at 2660, 2650, and 2620 December, with resistance at 2715, 2740, and 2790 December. Trends in London are mixed. Support is at 1750, 1720, and 1700 December, with resistance at 1800, 1815, and 1830 December.

Questions? Ask Jack Scoville today at 312-264-4322