Softs Report 04/03/2020

COTTON
General Comments Cotton was higher as the world stock markets and petroleum markets rallied. News that President Trump said he had brokered a deal between the Saudis and Russians to make very significant cuts in world Crude Oil production helped support these markets. Much of the selling was related to lost demand potential due to the Coronavirus. The Coronavirus has closed malls across America and stores are not selling clothes. Clothes for the US market made in Asia are not being ordered. Chinese buyers might need less Cotton now as factories inside their country were closed for an extended holiday. All are reopen now, but the manufacturing pace has been slow. China has also been slow to buy products from Southeast Asia and demand for US Cotton has been hurt in the entire region. The weakness in Petroleum futures comes from the moves by Saudi Arabia to ramp up production just at the time when the world economy is slowing down. The threat of a world-wide recession is very real.
Overnight News: The Delta will get scattered showers tomorrow and the Delta and Southeast should see scattered showers on Monday. Temperatures should be mostly above normal. Texas will have a few showers over the weekend. Temperatures will average mostly below normal. The USDA average price is now 44.81 ct/lb. ICE said that certified stocks are now 28,394 bales, from 28,446 bales yesterday.
Chart Trends: Trends in Cotton are mixed to down with objectives of 4750 and 4380 May. Support is at 4840, 4780, and 4720 May, with resistance of 5170, 5250 and 5320 May.

DJ On-Call Cotton – Apr 2
As of Mar 27. On-call positions represent spot cotton sold to or
purchased from a merchant, based on New York cotton futures contracts
of 500-pound bales. Prices are not yet fixed against these contracts.
Source: CFTC
*-denotes changes from the previous week are based on revised data from
last week.
Call Previous Change Call Previous Change
Sales Purchases
May 20 9,080 9,969 -889 6,046 8,498 -2,452
Jul 20 19,666 23,183 -3,517 9,404 8,079 1,325
Oct 20 0 0 0 0 0 0
Dec 20 20,492 22,649 -2,157 21,791 21,746 45
Mar 21 11,449 11,173 276 1,984 2,007 -23
May 21 5,193 5,027 166 416 460 -44
Jul 21 9,799 9,412 387 1,136 1,162 -26
Dec 21 3,189 2,068 1,121 4,919 4,434 485
Mar 22 466 466 0 13 13 0
Dec 22 0 0 0 7 7 0
Dec 23 0 0 0 7 7 0
Total 79,334 83,947 -4,613 45,723 46,551 -690
Open Change
Int
May 20 77,353 88,995 -11,642
Jul 20 49,762 49,202 560
Oct 20 102 102 0
Dec 20 49,957 50,076 -119
Mar 21 9,425 9,164 261
May 21 1,766 1,517 249
Jul 21 2,376 2,275 101
Dec 21 2,737 1,991 746
Mar 22 41 16 25
Dec 22 0 0 0
Dec 23 0 0 0
Total 193,519 203,338 -9,819

FCOJ
General Comments: FCOJ was lower. Trends turned down on the daily charts. Industry sources suggest that demand has improved as consumers are returning to FCOJ due to the Coronavirus. Many have been stockpiling juice, but much of the stockpiling could now be completed. Grocery stores in many areas have sold out and need to restock. The increased demand has really turned the market around. The early and mid crop harvest is about over and the Valencia harvest is increasing. Good growing conditions and increased oranges production estimates by USDA this season have been bearish. The weather has been great for the trees as there have been frequent periods of showers and no severe storms so far this year. Many areas have been dry lately and irrigation is being used. Reports indicate that new crop fruit is progressing well.
Overnight News: Florida should get mostly dry conditions. Temperatures will average above normal. Brazil should get isolated showers and near to above normal temperatures.
Chart Trends: Trends in FCOJ are down with objectives of 108.00 May. Support is at 111.00, 109.00, and 108.00 May, with resistance at 117.00, 120.00, and 122.00 May.

COFFEE
General Comments: Futures were higher in both markets on what appeared to be speculative short covering. Demand in consumer countries has increased due to stockpiling by consumers because of the Coronavirus. Containers are bottled up in China and are increasingly hard to find for shipping in most Coffee exporter countries. The chart trends are mixed to down in New York and in London due to big production ideas, but producers are having trouble getting workers to pick and the exporters are having trouble getting workers for processing and loading. Showers were reported in Brazil Coffee areas over the weekend and showers are continuing through this week. It is dry in other parts of Latin America. Central America has had less than normal rains, especially in Honduras. The Asian harvest is underway but producers do not seem to be selling on ideas that prices are too low.
Overnight News: ICE certified stocks are slightly lower today at 1.947 million bags. The ICO daily average price is now 111.17 ct/lb. Brazil will get isolated showers with near normal temperatures. Vietnam will see mostly dry conditions in the south and some light to moderate showers in the north.
Chart Trends: Trends in New York are mixed. Support is at 116.00, 112.00, and 110.00 May, and resistance is at 121.00, 124.00 and 131.00 May. Trends in London are mixed to down with no objectives. Support is at 1180, 1160, and 1150 May, and resistance is at 1220, 1250, and 1270 May.

SUGAR
General Comments: New York and London both closed higher after President Trump said he had brokered a deal between the Saudis and the Russians to cut back Crude Oil production in a very significant way. Futures fell from the highs on the realization that Ethanol demand will still be hurt as many are not really driving much due to the Coronavirus and various stay at home orders. The next harvest is about to start in Brazil, and major processors and sellers of ethanol announced force majeure in Brazil earlier this week due to the lack of driving caused by the Coronavirus there. The recently weaker petroleum futures make higher priced ethanol that much more expensive to blend and cuts demand. Prices in petroleum future reversed yesterday but still have a long way to go before Ethanol processing becomes profitable again. That makes more Sugarcane available for processing into Sugar. The Brazil mills are trying to cover the lack of White Sugar in the market and the price action suggests that they are succeeding. Reports indicate that little is on offer from India. Thailand might also have less this year due to reduced planted area and erratic rains during the monsoon season.
Overnight News: Brazil will get isolated showers. Temperatures should average near normal.
Chart Trends: Trends in New York are mixed to down with objectives of 990 May. Support is at 1040, 1010, and 970 May, and resistance is at 1080, 1130, and 1170 May. Trends in London are mixed. Support is at 335.00, 332.00, and 328.00 May, and resistance is at 352.00, 361.00, and 364.00 May.

COCOA
General Comments: New York and London closed a little higher on the back of stronger macroeconomic markets. London has been the weaker market as the British Pound has been relatively strong against the US Dollar and the Euro. New York has been trading in a sideways pattern for the last couple of weeks. Harvest is now over for the main crop in West Africa and the results so far are very good. Ideas are that demand is less than before due to the Coronavirus problems in Europe. The reports from West Africa imply that a big harvest in the region. The weather in Ivory Coast is good. The weather is too dry in Ghana and Nigeria and there are fears that the mid crop is not developing well at this time.
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 a little lower today at 3.975 million bags.
Chart Trends: Trends in New York are mixed. Support is at 2190, 2160, and 2130 May, with resistance at 2310, 2360, and 2400 May. Trends in London are down with objectives of 1550 and 1280 May. Support is at 1740, 1710, and 1680 May, with resistance at 1780, 1800, and 1840 May.