Morning Softs Report 06/13/18

COTTON
General Comments: Cotton was higher and made new highs for the move, in part as China gears up to import a lot more Cotton and in part due to the USDA reports. USDA increased old crop export demand and the change flowed to the ending stocks for this year and for next year. All other estimates were unchanged on the domestic side. The market hopes for significant new demand from China, but must wait until Friday when the Trump administration will announceits next moves against the Chinese. Cotton would be a loser in a trade war with China as China once again looks ready to become a major world buyer. Chinese planting weather was poor with too much rain. Demand ideas remain strong, especially with the mills and their on call position waiting to be covered in the next couple of weeks. Lost Chinese production could mean increased sales for the US, especially now since the US will have the quality the Chinese need. China is moving to allow more imports by increasing quotas now. Ideas have been that US Cotton conditions remain poor due to the extreme dry and hot weather in western Texas. The current weather is less than ideal in West Texas as hot and dry conditions continue and is not good at other producing areas around the world. The Southeast US is too wet, but has begun to dry out. The weather is bad in India and China, with big heat seen in India and Pakistan and too much rain in China. The monsoon has started in southern India, but Pakistan remains very hot and dry and is now facing drought conditions.
Overnight News: The Delta will be mostly dry and the Southeast will get drier weather this week. Both areas have chances for showers late this weekend. Temperatures should be mostly below normal. Texas will see mostly dry conditions. Temperatures will be above normal. The USDA average price is now 90.94 ct/lb. ICE said that certified stocks are now 79,472 bales, from 78,421 bales yesterday.
Chart Trends: Trends in Cotton are mixed to up with objectives of 9940 July. Support is at 9450, 9270, and 9170 July, with resistance of 9650, 9680, and 9740 July.

DJ USDA Supply/Demand: U.S. Cotton – Jun 12
U.S. Cotton Supply and Use
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Item 2017/2018 2018/2019
prev Jun 12 prev Jun 12
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Area
Million acres
Planted 12.61 12.61 13.47 * 13.47 *
Harvested 11.10 11.10 11.13 * 11.13 *
Pounds
Yield per harv. acre 905 905 841 * 841 *
Million 480 pound bales
Beginning stocks 2.75 2.75 4.70 4.20
Production 20.92 20.92 19.50 19.50
Imports 0.01 0.01 0.01 0.01
Supply, total 23.68 23.68 24.21 23.71
Domestic use 3.35 3.35 3.40 3.40
Exports 15.50 16.00 15.50 15.50
Use, total 18.85 19.35 18.90 18.90
Unaccounted 0.13 0.13 0.11 0.11
Ending stocks 4.70 4.20 5.20 4.70
Avg. farm price 67.00 – 69.0067.00 – 69.00 55.00 – 75.00 60.00 – 80.00
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DJ USDA Supply/Demand: World Cotton – Jun 12
World Cotton Supply and Use
(Million 480-pound bales)
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beginning domestic exports ending
stocks prod imports use loss stocks
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2018/19 (Projected)
World
May 88.21 121.19 41.12 125.44 41.12 0.22 83.75
Jun 88.21 120.40 41.06 125.35 41.07 0.22 83.02
United States
May 4.70 19.50 0.01 3.40 15.50 0.11 5.20
Jun 4.20 19.50 0.01 3.40 15.50 0.11 4.70
Total foreign
May 83.51 101.69 41.12 122.04 25.62 0.11 78.55
Jun 84.01 100.90 41.05 121.95 25.57 0.11 78.32
Major exporters
May 30.50 55.24 2.14 34.20 21.69 0.02 31.97
Jun 30.70 55.28 2.17 34.27 21.71 0.02 32.15
Major importers
May 51.08 43.40 36.52 83.78 2.69 0.09 44.45
Jun 51.38 42.60 36.42 83.65 2.64 0.09 44.02
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FCOJ
General Comments: FCOJ was lower as Florida weather remains good and demand prospects remain poor. USDA left its production report for the current crop about unchanged, and the weather for the next crop is called good. The tariff wars between the US and Canada, Mexico, and the EU are hurting export demand ideas. The EU imports a lot of FCOJ and these exports could be hurt by any retaliation made by Europe. The EU has indicated that FCOJ will be on the list of items subject to increased tariffs and that the measures will be enacted next month. The growing conditions in Florida should continue to improve as the rainy season appears to be underway. The market is still dealing with a short crop against weak demand. Demand is bad enough that year on year inventories are increasing even with the very bad production last year. Florida producers are seeing golf ball sized or larger fruit. Conditions are reported as generally good, although it is dry in the state this week. Brazil could use more rain as Sao Paulo has been hot and mostly dry. The harvest there is about to start. Generally good, but somewhat variable conditions are reported in Europe and northern Africa.
Overnight News: Florida should get scattered showers each day. Temperatures will average near to above normal. Brazil should get mostly dry weather, but some showers tomorrow, and near to above normal temperatures.
Chart Trends: Trends in FCOJ are down with objectives of 154.00 and 153.00 July. Support is at 152.00, 150.00, and 142.00 July, with resistance at 157.00, 159.00, and 161.00 July.

DJ USDA Crop Production: U.S. Citrus Fruits – Jun 12
Citrus Fruits: Utilized Production by Crop, State, and United States,
2016-17 and Forecasted June 1, 2018
(The crop year begins with the bloom of the first year shown and ends with the
completion of harvest the following year)
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Utilized Production Utilized Production
Boxes/1 Ton Equivalent
Crop and State ——————————————————–
2016-17 2017-18 2016-17 2017-18
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—— 1,000 Boxes 2/ —– —– 1,000 Tons ——
===============================================================================
Oranges
California, all 2/ 48,300 44,500 1,932 1,780
Early, mid, and Navel 3/ 39,300 35,000 1,572 1,400
Valencia 9,000 9,500 360 380
Florida, all 68,850 44,950 3,098 2,023
Early, mid, and Navel 3/ 33,000 18,950 1,485 853
Valencia 35,850 26,000 1,613 1,170
Texas, all 2/ 1,370 2,110 58 90
Early, mid, and Navel 3/ 1,090 1,550 46 66
Valencia 280 560 12 24
United States, all 118,520 91,560 5,088 3,893
Early, mid, and Navel 3/ 73,390 55,500 3,103 2,319
Valencia 45,130 36,060 1,985 1,574
Grapefruit
California 2/ 4,400 4,000 176 160
Florida, all 7,760 3,880 330 165
Red 6,280 3,180 267 135
White 1,480 700 63 30
Texas 2/ 4,800 5,700 192 228
United States 16,960 13,580 698 553
Tangerines and mandarins 4/
California 2/ 23,900 21,000 956 840
Florida 1,620 750 77 36
United States 25,520 21,750 1,033 876
Lemons 2/
Arizona 1,650 1,300 66 52
California 20,500 20,500 820 820
United States 22,150 21,800 886 872
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1/ Net pounds per box: oranges in California-80, Florida-90, Texas-85; grapefruit
in California-80, Florida-85, Texas-80; tangerines and mandarins in California-80,
Florida-95; lemons-80.
2/ Estimates for current year carried forward from previous forecast.
3/ Navel and miscellaneous varieties in California. Early (including Navel) and
midseason varieties in Florida and Texas.
4/ Includes tangelos and tangors.

COFFEE
General Comments Futures were slightly higher in New York, but a little lower in London. Both markets remain in trading ranges. Demand for Robusta is good as Brazil said it was preparing to buy Robusta in the world market to cover domestic needs. The dry weather in Brazil production areas for Robusta meant less production and there is now not enough to cover the domestic demand. Meanwhile, Robusta offers from Vietnam are less right now and traders say internal supplies are tight due to a smaller than expected harvest last year. A bigger new crop harvest is expected as current rains are good. It remains mostly dry in Arabica areas of Brazil, and there is no rain in the forecast for the next week. Origin is still offering in Central America and is still finding weak differentials. No coffee is moving in Nicaragua due to the political tensions there, and the volcano eruption in Guatemala has hurt the logistical situation there. Speculators anticipate big crops from Brazil and from Vietnam this year and have remained short in the market.
Overnight News: Certified stocks are higher today and are about 2.043 million bags. The ICO composite price is now 110.72 ct/lb. Brazil will get drier conditions. Temperatures should be near to above normal today, than below normal by this weekend. Colombia should get isolated showers. Central America and southern Mexico should get showers. Vietnam will get showers.
Chart Trends: Trends in New York are down with objectives of 115.00 and 111.00 July. Support is at 115.00, 112.00, and 109.00 July, and resistance is at 119.00, 122.00 and 125.00 July. Trends in London are mixed to down with objectives of 1710 and 1680 July. Support is at 1720, 1700, and 1670 July, and resistance is at 1740, 1760, and 1780 July.

DJ Brazil Exported 1.7 Mln Bags of Coffee in May — Cecafe
SÃO PAULO–Brazilian coffee exports fell in May from a year earlier, partly because of a truckers’ strike during the month that closed highways around the country, according to exporters group Cecafe.
The South American country exported 1.7 million 132-pound bags of coffee last month, a decline of 34.7% from the same month a year earlier, Cecafe said Tuesday.
Sales abroad of the arabica variety of coffee fell 38.4% to 1.4 million bags, while exports of robusta beans more than doubled to 46,488 bags from 19,799 bags in the same month a year earlier.
Exports of roasted, ground and instant coffee fell 15.7% in May to 234,042 bags, Cecafe said.

SUGAR
General Comments: Futures were mixed in New York and a little higher in London. Short term trends are starting to turn up again after the price action this week. Both markets have tested support after an initial move higher and held, so moves higher are possible now. However, upside potential is considered limited and this is called mostly a short covering rally. Analysts noted that the market still has plenty of Sugar and no real fear of short supplies, so the currency moves just add to potential availability. Prices have been supported by the dry weather in Brazil and also the truckers strike there that is now over. Shipments to mills and ports have started again. It is dry in parts of Brazil, including some Sugarcane production areas, and there is some talk of losses to the crop in the near future unless rains return soon. There are no real rains in the forecast for now. The harvest so far has been big and processing has been more active than last year. India is back to export Sugar this year after being a net importer for the last couple of years. The government is subsidizing industry and producers to help maintain an active market flow and to prevent the buildup of Sugar in storage. India will give aid of up to $1 billion to mills and will also stockpile supplies. Thailand has produced a record crop and is selling.
Overnight News: Brazil will get dry weather, but light precipitation is possible today. Temperatures should be near normal.
Chart Trends: Trends in New York are mixed to up with objectives of 1320, 1380, and 1390 October. Support is at 1250, 1220, and 1190 October, and resistance is at 1280, 1320, and 1340 October. Trends in London are mixed. Support is at 347.00, 337.00, and 335.00 August, and resistance is at 356.00, 360.00, and 361.00 August.

DJ USDA Supply/Demand: U.S. Sugar – Jun 12
U.S. Sugar Supply and Use
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Item 2017/2018 2018/2019
prev Jun 12 prev Jun 12
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1,000 short tons, raw value
Beginning stocks 1,876 1,876 1,901 1,876
Production 9,252 9,238 8,981 8,961
Beet sugar 5,221 5,221 5,036 5,036
Cane sugar 4,031 4,017 3,945 3,925
Florida 1,998 1,983 2,085 2,085
Hawaii 0 0 0 0
Louisiana 1,859 1,859 1,680 1,680
Texas 175 175 180 160
Imports 3,422 3,387 3,365 3,365
TRQ 1,788 1,788 1,355 1,355
Other program 350 300 350 350
Other 1,284 1,299 1,660 1,660
Mexico 1,269 1,269 1,645 1,645
Total supply 14,551 14,501 14,247 14,203
Exports 170 170 50 85
Deliveries 12,480 12,455 12,655 12,655
Food 12,325 12,300 12,500 12,500
Other 155 155 155 155
Miscellaneous 0 0 0 0
Total use 12,650 12,625 12,705 12,740
Ending stocks 1,901 1,876 1,542 1,463
Stocks to use ratio 15.0 14.9 12.1 11.5
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DJ Brazil Center-South Sugar Crush Up 2.2% in Second Half of May
SAO PAULO–Brazilian sugar mills in the country’s center-south region crushed more cane in the second half of May compared with a year earlier, according to industry group Unica.
Center-south mills crushed 32.4 million metric tons of cane in the period, a rise of 2.2% from the same period a year earlier. They produced 1.3 million tons of sugar, down 23.8%, and made 1.7 billion liters of ethanol, an increase of 44.5%.
The production mix for the second half of last month was 32.5% sugar to 67.5% ethanol. A year earlier, the mix was 47.5% sugar and 52.5% ethanol.
Brazil is the world’s biggest sugar producer and exporter, and the center-south grows about 90% of the country’s cane.
In the season from April 1 through June 1, mills in the region crushed 134.8 million tons of cane, up 20.2% from the same period a year earlier. Sugar production fell 3.9% to 5.5 million tons, and ethanol output rose 51.9% to 6.6 billion liters.
The production mix for the season through June 1 was 34.5% sugar to 65.5% ethanol. A year earlier, the mix was 45.2% sugar and 54.8% ethanol.

COCOA
General Comments Futures were higher in recovery trading. The daily charts show that bottoms could be forming and getting completed now.. Futures have now fallen enough to fill a big gap on the weekly charts, and now the market is deciding on the next move. Ideas are that demand can start to improve with the lower price levels, but the world economic situation is still in a flux after the G-7 meetings. Fears that developed about the EU economy last week spilled into Cocoa as Europe is the largest per capita consumer of chocolate in the world. North American demand could be pressured due to the economic wars started in the US against its neighbors. 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. The mid crop harvest is active in West Africa.
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 5.060 million bags.
Chart Trends: Trends in New York are mixed. Support is at 2300, 2260, and 2250 July, with resistance at 2460, 2480, and 2500 July. Trends in London are mixed. Support is at 1650, 1600, and 1570 July, with resistance at 1710, 1750, and 1780 July.