Cotton December 2019 (new-crop): The contract closed at 58.83, up 0.62 for the week. After falling to a new low for this move, Dec cotton was able to rally to a higher weekly close. This looks to be a bullish spike reversal, confirming a series of bullish crossover by weekly stochastics below the oversold level of 20%. Support has come from renewed commercial buying, indicated by the weakening carry in the December-to-March futures spread. While some of this interest may have been tied to the expectation of Hurricane Dorian making U.S. landfall this weekend, technically it still looks like the contract is trying to turn bullish. Theoretical Position: 2019 production could be 50% covered at 82.56 (close the week of June 11, 2018 as part of a bearish spike reversal) against the December contract. Those needing to make catch-up sales might’ve priced 25% near the weekly close of 77.19 (week of April 8) based on the bearish crossover by weekly stochastics. There is no hurry to cover these hedges based on recent indications that the secondary trend may be turning up. Those wanting to go long the market could’ve bought near the recent weekly close of 58.90, putting a stop below the contract low of 57.26. Additional longs could be added near last Friday’s close. With a stop below the new contract low of 56.59.
Sugar October 2019 (new-crop): The contract closed at 11.14, down 0.33 for the week. October sugar posted a new contract low of 11.05 last week, pulling weekly stochastics well below the oversold mark of 20%. Pressure continues to come from commercial selling, with the October-to-March spread closing at 1.09, equaling its low weekly close from the week of August 5. Theoretical Position: It’s possible 25% of expected 2019 production was priced near 14.10 (close the week of October 10, 2018), and another 25% near 13.26 (close the week of February 25, 2019) for 50% priced at an average of 13.68.
Cocoa December 2019: The contract closed at 2,222, down 16 for the week. Despite its lower weekly close the December contract still looks to be in a secondary (intermediate-term) uptrend. Support remains at the preview week’s low of 2,165. Theoretical Position: Short positions were likely lifted and long positions established near the previous Friday’s close of 2,238. If so, stops would be under the previous week’s low of 2,165.
Coffee December 2019: The contract closed at 96.85, up 0.80 for the week. The contract extended the rally off its new contract low of 93.40, hitting a high of 98.50 last week. The higher weekly close led to a bullish crossover by weekly stochastics, indicating the secondary (intermediate-term) trend is in the process of turning up. Theoretical Position: Those still wanting to be long coffee could look at taking a position near the previous week’s close, with a stop again below the new contract low.