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COTTON
General Comments: Cotton closed higher once again on follow through buying tied to the USDA reports and increased export demand. USDA surprised the market on Thursday when it released its monthly supply and demand reports. The reports showed a significant drop in production of US Cotton and much reduced US ending stocks levels. The reports were bullish and a move to the upper end of the 70 cents range is possible. Harvest is wrapping up amid drier weather conditions in West Texas and the Delta and Southeast. The weekly export sales report showed very strong demand again today. Export demand has held strong despite stay at home orders and weaker economies around the world. Traders now hope for even more demand later as the vaccines are given out and the world economies start to recover.
Overnight News: The Delta and Southeast will get mostly dry conditions except for some showers on Friday in the Delta and Saturday in the Southeast. Temperatures should average near to below normal in the Delta and in the Southeast. Texas will have mostly dry conditions except for some isolat4ed showers on Friday and near to below normal temperatures. The USDA average price is now 71.36 ct/lb. ICE said that certified stocks are now 79,352 bales, from 82,228 bales yesterday. ICE said that 0 notices were posted for delivery against December contracts and that total deliveries for the month are now 354 contracts. USDA said that net weekly Upland Cotton export sales were 420,900 bales this year and 13,800 bales next year. Net Pima sales were 7,900 bales this year and 0 bales next year.
Chart Trends: Trends in Cotton are up with objectives of 7490, 7740, and 7930 March. Support is at 7460, 7400, and 7350 March, with resistance of 7560, 7590 and 7620 March.

FCOJ
General Comments: FCOJ was higher on short covering following the sharp selloff due to the better than expected Florida crop production report. January closed firm. Florida was spared from hurricanes or other serious storms this year in a year that has been very active for tropical storms. The Coronavirus is still promoting consumption of FCOJ at home, but this could change soon as vaccines become available. Restaurant and food service demand has been much less as no one is dining out. The weather in Florida is good with some showers to promote good tree health and fruit formation. Brazil has been too dry. Showers are falling in Brazil now and these need to continue to ensure good tree health. Mexican crop conditions are called good with rains.
Overnight News: Florida should get scattered showers today, then dry conditions. Temperatures will average below normal. Brazil should get scattered showers and above normal temperatures.
Chart Trends: Trends in FCOJ are mixed to down with objectives of 112.00 and 110.00 January. Support is at 115.00, 113.00, and 110.00 January, with resistance at 118.00, 120.00, and 122.00 January.

COFFEE
General Comments: Futures were higher again on Brazil weather and an overall weakening US Dollar. Trends in the US Dollar remain down against the basket of currencies. Ideas of poor flowering for the Brazil crop and high offer prices from Central America are supporting New York and to a lesser extent London. It has been a weather market and the weather has improved. Vietnam has harvested about a quarter of its projected production under mostly dry conditions. Central America is also drier for harvesting. Brazil is getting some rains now to improve flowering after an extended dry season. The demand from coffee shops and other food service operations is still at very low levels as consumers are still drinking Coffee at home. Reports indicate that consumers at home are consuming blends with more Robusta and less Arabica. The weather is good in Colombia and Peru.
Overnight News: ICE certified stocks are higher today at 1.356 million bags. GCA stocks are 5.809 million bags, from 6.137 million bags last month. The ICO daily average price is now 116.85 ct/lb. Brazil will get scattered showers with near to above normal temperatures. Central America will get scattered showers. Vietnam will see mostly dry conditions. ICE said that 0 contracts were tendered for delivery against December futures and that total deliveries for the month are now 1,592 contracts.
Chart Trends: Trends in New York are up with objectives of 130.00 and 135.00 March. Support is at 125.00, 120.00, and 116.00 March, and resistance is at 128.00, 129.00 and 130.00 March. Trends in London are mixed to up with objectives of 1420, 1460, and 1780 March. Support is at 1330, 1310, and 1290 January, and resistance is at 1380, 1390, and 1410 January.

DJ Brazil Raises 2020 Total Coffee Crop Estimate to 63.1M Bags
By Jeffrey T. Lewis
SÃO PAULO–Brazilian coffee growers produced a record amount of coffee in 2020 as the area planted with the crop increased, government agricultural agency Conab said Thursday in its final report on this year’s crop.
The agency raised its estimate for the crop to 63.1 million 132-pound bags, from its September estimate of 61.6 million bags. Brazil’s farmers grew 48.8 million bags of the more sought-after arabica variety of coffee, an increase from the September estimate of 47.4 million bags. Conab left its estimate for the robusta variety at 14.3 million bags.
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. The South American country’s arabica production has a two-year cycle in which even-numbered years produce a bigger crop, then a smaller crop the following year as the plants “rest.”
In 2019, Brazil produced a total of 49.3 million bags, and in 2018 the country grew a record 61.7 million bags.
Write to Jeffrey T. Lewis at jeffrey.lewis@wsj.com

SUGAR
General Comments: New York and London closed a little higher on follow through buying tied to news earlier in the week of lower cane production estimates for Brazil. The weather has improved in growing areas now but it has been very dry overall. It has been raining in south central Brazil and the production of cane has been affected. Rains are now spreading north to help the cane in those areas. The first half of November crush was down almost 20% from the previous year as cane production has been hurt due to dry weather earlier in the year. Brazil mills have been producing more Sugar and less Ethanol due to weak world and domestic petroleum prices. India has a very big crop of Sugarcane this year. The Indian government has not announced the subsidy for exporters of Sugar so no exports are coming out of India yet. One could be announced soon according to the newswires. Sources told wire services that any subsidy will need to be significant to get export sales on the books. Thailand might have less this year due to reduced planted area and erratic rains during the monsoon season. The EU is having problems with its Sugarbeets crop due to weather and disease.
Overnight News: Brazil will get scattered showers. Temperatures should average above normal.
Chart Trends: Trends in New York are mixed to down with objectives of 1320, 1300, and 1240 March. Support is at 1410, 1400, and 1380 March, and resistance is at 1450, 1480, and 1510 March. Trends in London are mixed to down with objectives of 381.00, 364.00, and 316.00 March. Support is at 389.00, 381.00, and 376.00 March, and resistance is at 401.00, 406.00, and 410.00 March.

COCOA
General Comments: New York and London closed lower and made new lows for the move. Ivory Coast and Ghana have instituted a living wage for producers there and are looking to tax exports to pay the increased wages. Buyers have been accused of using certified stocks from the exchange instead of buying from origin. However, it looks like the exchange buying is over. There are a lot of demand worries as the Coronavirus is making a comeback in the US. Europe is also seeing a return of the pandemic. However, chocolate manufacturers are reporting good demand from consumers
Overnight News: Sporadic and light showers are forecast for West Africa. Temperatures will be near 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 2.922 million bags. ICE said that 0 contracts were tendered against December Cocoa and that total deliveries for the month are now 1,255 contracts.
Chart Trends: Trends in New York are down with objectives of 2440, 2400, and 2310 March. Support is at 2450, 2440, and 2430 March, with resistance at 2580, 2630, and 2650 March. Trends in London are down with objectives of 1650 and 1570 March. Support is at 1620, 1600, and 1580 March, with resistance at 1710, 1730, and 1760 March.

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

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