Jack Scoville is an often quoted market analyst in the grain and soft commodities sectors. You will find his commentary throughout the Reuters, Wall Street Journal, Dow Jones, Bloomberg, and Barron's publications. Contact Mr. Scoville at (312) 264-4322
DJ FAO Food Price Index Climbed 1.9% in March
By David Hodari
LONDON–World food prices rose in March, driven by higher meat and dairy prices, the Food and Agriculture Organization of the United Nations said Thursday.
The FAO Food Price Index rose 1.9% from its February level–notching its highest reading since August 2018–although remained some 3.6% below the level in the same month last year, the organization said.
Dairy prices rose 6.2%, extending its streak of gains to three months thanks to higher butter, cheese, and whole milk powder prices amid a seasonal slowdown in Australasian production.
Meat prices rose 0.4% as a surge in Chinese import demand supported pig, bovine, and poultry prices.
Vegetable oils fell 4.4% as palm, soy, and rapeseed oil prices slipped.
Cereal prices dropped 3.7% on month, slipping close to their value in the same month the previous year. Wheat prices were a particular driver as global production continued its recovery from last summer’s drought.
Sugar prices fell 2.1% on month, amid rising production expectations.
General Comments Cotton was higher and held the recent trading range. The export sales report was not strong, but the market was supported by the US-China trade meetings going on now. There is talk that the US can have increasingly strong sales within the next few weeks with other major exporters starting to run low on supplies. Everyone is waiting for the resolution of the US-China trade dispute, and the US government is indicating that a deal is going to be more difficult to achieve by the end of the month. China has said that May is more likely for a trade deal. Both sides are negotiating the final points. The US weather continues to feature a lot of rain in the south, and fieldwork and initial planting in far southern areas is mostly delayed. However, some Cotton is getting planted and Cotton acres might be added if the Corn can’t get planted on time.
Overnight News: The Delta and Southeast should get showers and rains into next week. Temperatures should be mostly above normal this week, then cooler. Texas will have dry weather until some showers appear on Saturday. Temperatures will trend to below normal. The USDA average price is now 71.86 ct/lb. ICE said that certified stocks are now 32,089 bales, from 39,345 bales yesterday.
Chart Trends: Trends in Cotton are mixed. Support is at 7700, 7650, and 7610 May, with resistance of 7800, 7850, and 7890 May.
DJ On-Call Cotton – Apr 4
As of Mar 29. 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.
*-denotes changes from the previous week are based on revised data from
Call Previous Change Call Previous Change
May 19 20,182 22,227 -2,045 9,273 9,741 -468
Jul 19 32,873 31,864 1,009 4,565 4,560 5
Dec 19 27,054 25,863 1,191 29,424 28,501 923
Mar 20 11,854 11,377 477 1,462 1,472 -10
May 20 4,626 4,261 365 197 197 0
Jul 20 4,809 4,660 149 18 18 0
Dec 20 5,398 5,309 89 6,886 6,799 87
Mar 21 828 815 13 309 309 0
May 21 9 0 9 0 0 0
Jul 21 4 0 4 0 0 0
Total 107,637 106,376 1,261 52,134 51,588 537
May 19 88,316 102,799 -14,483
Jul 19 63,422 52,751 10,671
Oct 19 12 7 5
Dec 19 63,036 58,791 4,245
Mar 20 8,496 8,173 323
May 20 454 445 9
Jul 20 255 221 34
Dec 20 1,888 1,842 46
Mar 21 7 7 0
May 21 0 0 0
Jul 21 0 0 0
Total 225,886 225,036 850
General Comments: FCOJ was lower again and made new lows for the move. Short term trends turned down again with the price action yesterday. Ideas continue that production remains strong and demand does not are backed up by the weekly Florida Movement and Pack report that shows that inventories inside the state are significantly higher than a year ago. The Oranges harvest remains active in Florida as the new crop begins to form. The Early and Mid harvest is over and producers are concentrating on harvesting Valencia. Flowers are starting to drop and some fruit is forming and developing. Mostly good conditions are reported in Brazil.
Overnight News: Florida should get scattered showers today and Friday. Temperatures will average near normal. Brazil should get scattered showers on Friday and above normal temperatures.
Chart Trends: Trends in FCOJ are mixed to down with objectives of 117.00, 115.00, and 110.00 May. Support is at 117.00, 116.00, and 115.00 May, with resistance at 122.00, 125.00, and 128.00 May.
General Comments Futures were higher during the session on Brazilian Real weakness. The rally did not hold and the markets finished with small losses in a consolidation type trading session. New York is back inside its recent trading range, but trends in London remain down. Both markets could start to rally soon and the Brazil Winter is not that far away. The trade is still worried about big supplies, especially from Brazil and low demand. Brazil had a big production year for the current crop, but the next crop should be less as it is the off-year for production. Ideas are that the current production of 62 or 63 million bags can become about 52 million bags next year. Lilly estimated the next crop production at 55 million bags. El Nino remains in the forecast, and Coffee areas in Brazil could be affected by drought that could hurt production even more. It has started to turn dry in Coffee areas as the tropical dry season gets underway. Vietnam is active in its harvest, but producers are not willing to sell at current prices. It is still dry, and production potential for the next crop is getting hurt.
Overnight News: ICE certified stocks are a little lower today at 2.492 million bags. The ICO daily average price is now 97.25 ct/lb. Brazil will get mostly dry conditions with below normal temperatures until showers and rains appear on Friday and Saturday. Vietnam will see some showers in central and northern areas today and tomorrow.
Chart Trends: Trends in New York are mixed. Support is at 93.00, 91.00, and 88.00 May, and resistance is at 98.00, 100.00 and 101.00 May. Trends in London are down with objectives of 1370 May. Support is at 1420, 1390, and 1360 May, and resistance is at 1460, 1480, and 1500 May.
DJ ICO Coffee Price Index Hit 13-Year Low in March
By David Hodari
LONDON–The International Coffee Organization’s composite indicator price slumped 3.1% in March to its lowest level in over a decade on a combination of heavy supply and currency moves.
The ICO composite indicator fell to 97.50 cents a pound from 100.67 cents in February, its lowest since October 2006.
Prices fell for robusta and all groups of coffee, with Brazilian naturals staging the biggest fall. That arabica variety fell 4.2% to 95.81 cents a pound–hitting a 13-year low–with other mild down 3.6% and Colombian mild prices down 2.1%. Robusta beans dropped 2.1%.
The arbitrage between low-grade robusta and its higher-quality peer shrank by 10% to its slimmest since 2003, while intraday volatility slipped to 5.7%, the ICO said in a report.
Ample supply on the international coffee market has been the key driver behind prices drops in recent weeks, with producing nation bodies releasing increasingly alarmed messages.
“The current pauperization process of coffee producers is destroying the very social fabric in the rural areas of more than 40 countries,” said the World Coffee Producers Forum in a release last week, “leading to increased criminality in producing nations, more poverty in the cities, and massive migrations towards the United States and Europe.”
Farmers are currently selling arabica coffee on international exchanges at below the cost of production, with global number one producer Brazil on course for another bumper crop.
“In coffee year 2018-19, production is estimated to surpass consumption by 3.06 million bags, which is the second year of surplus,” the ICO said.
London-traded robusta was last down 0.41% at $1,451 a ton, while arabica was up 0.1% at $0.95 a pound.
General Comments: Futures closed higher and charts still show a sideways range in New York. New York basically covered the entire short-term trading range with the price action yesterday, and speculators are watching. Breaking the range would give a big clue to the direction of the next move. London trends are down again and it looks like the fundamentals of big world Sugar supplies are still the main trading feature. The upside price potential might be somewhat limited. The fundamentals still suggest big supplies, and the weather in Brazil has improved to support big production ideas. Ideas of big production in Asia also help keep any rallies in check. Brazil weather is improving in all areas in recent weeks. However, it has turned drier in northern areas and there is concern that the dry season is starting early this year. Brazil has been using a larger part of its Sugarcane harvest to produce ethanol this year instead of Sugar, but Thailand has shown increased production this year. Ideas that production in India and Pakistan is strong.
Overnight News: Brazil will get mostly dry weather until showers and rains appear on Friday and Saturday. Temperatures should be near to above normal.
Chart Trends: Trends in New York are mixed. Support is at 1230, 1220, and 1210 May, and resistance is at 1280, 1300, and 1340 May. Trends in London are mixed to down with objectives of 320.00 May. Support is at 327.00, 321.00, and 319.00 May, and resistance is at 334.00, 336.00, and 340.00 May.
China – Sugar production reached 2.52 mln tonnes in March, up over 16% from the same month last year and the highest volume for March since 2014, according to data from the China Sugar Association. Output so far in 2018/19 (Oct/Sep) at 9.897 mln tonnes.
General Comments: Futures closed higher again in both markets on what appeared to be follow through speculative buying. Futures are at some longer term resistance areas in New York and appear to be breaking through these areas in London. The market appears to be looking for sales and trade action implies that a squeeze is on between the West African harvests. The main crop harvest should be about over and mid crop harvest is still a month or more away. Ivory Coast arrivals are strong as are exports. Growing conditions are generally good in West Africa. Some early week showers and cooler temperatures were beneficial, and most in West Africa expect a very good mid crop harvest. Cameroon and Nigeria are reporting less production and prices there are reported strong. Conditions appear good in East Africa and Asia, but East Africa has been a little dry as has Malaysia.
Overnight News: Scattered showers are expected in West Africa. Temperatures will average near to 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 higher today at 4.222 million bags.
Chart Trends: Trends in New York are up with objectives of 2460 May. Support is at 2370, 2350, and 2310 May, with resistance at 2450, 2480, and 2510 May. Trends in London are up with objectives of 1900 May. Support is at 1780, 1770, and 1750 Mary, with resistance at 1810, 1840, and 1860 May.