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
General Comments: Cotton was lower after starting the day higher in recovery trading. Futures remain weak in response to the threat from President Trump to increase tariffs from 10% to 25% in response to the slow pace of negotiations and reports that China was hoping to renegotiate some parts of the agreement. The US wants to hold things as they are and force new laws in China to help on the enforcement of any deal. USDA showed that planting progress was good in its weekly crop updates last night, but USDA could report slower planting progress in the reports this week due to bad weather in much of the Delta and Southeast. Some rains have also appeared in western Texas. There are expectations that Cotton planted area can increase this season as farmers could be attracted to Cotton instead of grains such as Corn or Rice due to relative pricing. Cotton production is poised to make a comeback in the Delta and Southeast, and the wet weather implies less Corn planted and more Cotton or Soybeans planted. Prices and producer attitudes imply that more Cotton could be planted.
Overnight News: The Delta and Southeast should get scattered showers and storms through the week. Temperatures should be mostly above normal today and tomorrow, than below normal. Texas will have showers and storms through the week, than mostly dry weather. Temperatures will average above normal today and tomorrow, then below normal. The USDA average price is now 67.64 ct/lb. ICE said that certified stocks are now 81,588 bales, from 77,055 bales yesterday. ICE said that 54 notices were posted against contracts for May delivery and that total deliveries for the month are now 319 contracts.
Chart Trends: Trends in Cotton are down with objectives of 7130 July. Support is at 7300, 7240, and 7180 July, with resistance of 7370, 7500, and 7520 July.
General Comments: : FCOJ was lower in quiet trading. Trends are down on the daily and weekly charts as the market looks at a big oranges crop and little demand for FCOJ. Inventories inside the state are significantly higher than a year ago as Florida Citrus Mutual showed a 30% increase in state inventories in its weekly report. The increase is coming from less demand and higher imports along with the increased domestic production. The Oranges harvest remains active in Florida as the new crop begins to develop. Producers are concentrating on harvesting Valencia and harvest progress should be strong. Fruit for the next crop is developing and ideas are that the next crop is off to a very good start. Fruit is marble to quarter sized at this time. Production is very uniform so far this year and development throughout the state is about equal. Some fruit drop is being reported, but this is normal as the trees move to the next crop and drop the old fruit. Irrigation is being used frequently to help protect crop condition. Mostly good conditions are reported in Brazil.
Overnight News: Florida should get mostly dry weather. Temperatures will average near to above normal. Brazil should get scattered showers late this week and below normal temperatures. ICE said that 0 notices were posted for delivery against May contracts today and that total deliveries for the month are now 0 contracts.
Chart Trends: Trends in FCOJ are down with objectives of 88.00 and 83.00 July. Support is at 89.00, 86.00, and 83.00 July, with resistance at 95.00, 98.00, and 101.00 July.
General Comments: Futures were lower yesterday in both markets as speculators and funds sold based on additional Real weakness. Trends are down in both markets as the unrelenting down trend continues. The trade is still worried about big supplies, especially from Brazil and low demand. Brazil is dominating the market, and other exporters are having a lot of trouble finding buyers. Roasters were scale down buyers on the extended down move and now have more than ample supplies in-house or on the way. 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 next crop might still be big as the weather has been good for the trees so far. Mostly dry conditions are in the forecast for this week. Vietnam is active in its harvest and the export pace has been good so far this year. Growing conditions are good in Brazil, but it is a little dry in Central America and Vietnam. Shower activity is increasing in Vietnam.
Overnight News: ICE certified stocks are unchanged today at 2.438 million bags. UCE said that 12 notices were posted against May contracts and that total deliveries for the month are now 1,718 contracts. The ICO daily average price is now 89.31 ct/lb. Brazil will get mostly dry conditions or light showers with near normal temperatures. Near to above normal temperatures are expected next week. Vietnam will see mostly dry conditions.
Chart Trends: Trends in New York are down with objectives of 88.00 and 81.00 July. Support is at 86.00, 83.00, and 80.00 July, and resistance is at 91.00, 93.00 and 95.00 July. Trends in London are down with objectives of 1280 July. Support is at 1280, 1250, and 1220 July, and resistance is at 1340, 1370, and 1400 July.
DJ Coffee Slump Continues Amid Declining Exports: ICO — Market Talk
0828 GMT – Coffee prices fell to their lowest level in almost 13 years in April, the International Coffee Organization says. The ICO’s composite price index fell to 94.42 cents a pound, down 3.2% from March and 16.1% from April last year, the intergovernmental organization says in its monthly market report. Lower prices appear to be discouraging sales: world exports of coffee fell to 10.98 million bags in March 2018, down 3.8% from a year before. Surging shipments from Brazil, encouraged by a weak exchange rate and strong harvest, continue to drive international prices down. (email@example.com)
General Comments: Futures were lower in response to the weaker Brazilian Real and on the CONAB estimate for increased Brazilian Sugar production. New York broke some important support areas last week and London turned trends down as well. The speculative selling has been strong now for the last week due to the new down trend. The fundamentals still suggest big supplies, and the weather in Brazil has improved to support big production ideas. Brazil weather is good in all areas, although southern areas remain too wet. Brazil has been using a larger part of its Sugarcane harvest to produce ethanol this year instead of Sugar, but Thailand has been offering. Ideas that production in India and Pakistan is being hurt by uneven rains so far. Very good conditions are reported in Thailand, but production this year could be less due to reduced area and low prices. Demand for Sugar has been good, and demand for ethanol is reported to be increasing.
Overnight News: Brazil will get mostly dry weather or light showers. Temperatures should be near to above normal.
Chart Trends: Trends in New York are down with objectives of 1150 July. Support is at 1170, 1150, and 1130 July, and resistance is at 1200, 1230, and 1240 July. Trends in London are down with objectives of 321.00 and 308.00 August. Support is at 324.00, 321.00, and 318.00 August, and resistance is at 332.00, 334.00, and 339.00 August.
DJ Bumper Thai, Indian Crops Depress Premium for White Sugar: ISO — Market Talk
1251 GMT – The premium companies and investors that pay to buy refined as opposed to raw sugar fell to a multi-year low in April, the International Sugar Organization says in its monthly report. Bumper crops in Thailand and India, major exporters of white sugar, pushed the premium down to $54.01 a metric ton. Overall it was a “dull” month for the sugar market, the ISO says, as prices moved in a narrow range. Hedge funds maintained a net short position, betting that prices will fall. Since May 2017, they have been net short sugar for all but four weeks, the ISO notes. (firstname.lastname@example.org)
DJ Brazil 2019-2020 Sugar Production to Rise 17.4% on Year to 34.1M Tons -Conab
By Jeffrey T. Lewis
SAO PAULO–Brazil’s sugar output will jump in the 2019-2020 cane growing season as mills return to a more normal production level of the sweetener following the previous season’s ethanol-heavy production, according to the forecast by Brazilian crop agency Conab.
Farmers will grow 616 million metric tons of cane in the season, down 0.7% from the 2018-2019 season, Conab predicted. Sugar production will jump 17.4% to 34.1 million tons and ethanol output will fall 4.2% to 31.8 billion liters, Conab said.
With low prices for sugar on world markets last season because of larger than normal output in other countries such as India and China, Brazilian sugar mills cut output of the sweetener and produced a record amount of ethanol. With sugar prices seen recovering a bit this year, mills should return to a production mix closer to those in earlier years.
The mix will be 39.1% sugar and 60.9% ethanol in the 2019-2020 season, from 34.9% sugar and 65.1% ethanol in 2018-2019, according to Conab.
In Brazil’s center-south region, which produces about 90% of the country’s sugar cane, the cane crop is forecast to fall 1% to 566.7 million tons, while sugar output will rise 18.6% to 31.4 million tons and ethanol production will fall 4.5% to 29.6 million tons, Conab said.
The country has the world’s biggest fleet of vehicles that can run on either ethanol or gasoline, and all gasoline sold at the pumps is also at least 27% ethanol. Brazil’s sugar mills can adjust their production of the sweetener and the alternative fuel based on which is more profitable.
General Comments: Futures closed lower yesterday in both markets and both markets are showing that tops have formed. Speculative selling was the main feature and was seen in many softs markets yesterday. Ivory Coast arrivals are strong as are exports. The weekly arrivals pace is about 15% higher than a year ago and is holding this level. Arrivals were reported strong in the rest of West Africa as well. Demand appears strong and the market saw stronger than expected grind data when the quarterly grind is released in the EU, North America, and Asia over the next couple of weeks. Growing conditions are generally good in West Africa as there are showers and somewhat cooler temperatures. Conditions appear good in East Africa and Asia, but Brazil has been a little dry as has Malaysia. Ivory Coast arrivals are now estimated at 1.874 million tons, from 1.642 million last year.
Overnight News: Scattered showers and storms 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 4.496 million bags. ICE said that 0 notices were posted against May contracts and that total deliveries for the month are now 457 contracts.
Chart Trends: Trends in New York are mixed to down with objectives of 2250 and 2150 July. Support is at 2290, 2230, and 2190 July, with resistance at 2310, 2350, and 2380 July. Trends in London are down with objectives of 1700, 1680, and 1640 July. Support is at 1740, 1710, and 1690 July, with resistance at 1760, 1780, and 1810 July.