About The Author

Jack Scoville

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

COTTON
General Comments: Cotton was a little lower in reaction to the USDA reports. USDA made no changes on the domestic side but showed bigger world supplies. The bigger supplies are located in both exporter and importer nations.. The market is experiencing lost business potential with China and Turkey and could get hurt if Vietnam is targeted for tariffs later on. There are some concerns that the cold May weather from Texas to the Delta might cause lower yields this Fall. It has been hot and dry for the last few weeks in the Southeast, and crops of all kinds in the region need water and cooler weather. Precipitation moved into the region over the weekend and brought some very big rains. Also pressuring the market are forecasts for big production around the world. USDA sees no shortage of Cotton anywhere in the coming year. However, it could be that the Indian monsoon gets off to a slow start and production potential gets hurt there and in Pakistan. It has been dry so far and is turning hotter, but this is considered pre monsoonal weather. Below normal rains are now in the forecast for both countries in June.
Overnight News: The Delta and Southeast should get drier weather until showers and storms start to develop again this weekend. Temperatures should be mostly above normal. Texas will have scattered showers on Wednesday and Thursday, otherwise dry weather. Temperatures will average near to above normal. The USDA average price is now 60.58 ct/lb. ICE said that certified stocks are now 88,260 ba1es, from 86,065 bales yesterday.
Chart Trends: Trends in Cotton are down with objectives of 6540 and 6240 July. Support is at 6520, 6490, and 6450 July, with resistance of 6650, 6690, and 6850 July.

DJ USDA Supply/Demand: U.S. Cotton – Jun 11
U.S. Cotton Supply and Use 1/ =========================================================================
Item 2018/2019 2019/2020
prev Jun 11 prev Jun 11
==========================================================================
Area
Million acres
Planted 14.10 14.10 13.78 * 13.78 *
Harvested 10.21 10.21 12.54 * 12.54 *
Pounds
Yield per harv. acre 864 864 842 * 842 *
Million 480 pound bales
Beginning stocks 4.30 4.30 4.65 4.65
Production 18.37 18.37 22.00 22.00
Imports 0.01 0.01 0.01 0.01
Supply, total 22.67 22.67 26.66 26.66
Domestic use 3.10 3.10 3.10 3.10
Exports 14.75 14.75 17.00 17.00
Use, total 17.85 17.85 20.10 20.10
Unaccounted 2/ 0.17 0.17 0.16 0.16
Ending stocks 4.65 4.65 6.40 6.40
Avg. farm price 3/ 70.00 70.00 65.00 64.00
==========================================================================

DJ USDA Supply/Demand: World Cotton – Jun 11
World Cotton Supply and Use 1/
(Million 480-pound bales)
=============================================================================
beginning domestic exports ending
stocks prod imports use loss 2/ stocks
=============================================================================
2019/20 (Projected)
World
May 76.47 125.45 45.35 125.93 45.35 0.31 75.69
Jun 77.53 125.32 44.74 125.27 44.75 0.31 77.26
World Less China
May 42.85 97.70 34.35 84.43 45.22 0.31 44.94
Jun 43.16 97.57 34.24 84.27 44.63 0.31 45.76
United States
May 4.65 22.00 0.01 3.10 17.00 0.16 6.40
Jun 4.65 22.00 0.01 3.10 17.00 0.16 6.40
Total foreign
May 71.82 103.45 45.35 122.83 28.35 0.16 69.29
Jun 72.88 103.32 44.74 122.17 27.75 0.16 70.86
Major exporters 4/
May 26.42 56.97 2.14 34.81 24.18 0.02 26.51
Jun 26.73 56.78 2.14 34.81 23.64 0.02 27.18
Major importers 8/
May 43.43 43.52 40.60 83.79 2.90 0.14 40.72
Jun 44.23 43.52 40.00 83.09 2.88 0.14 41.65
=============================================================================

DJ USDA Supply/Demand: World Cotton – 2
World Cotton Supply and Use 1/ (continued)
(Million 480-pound bales)
===============================================================================
beginning domestic exports ending
stocks prod imports use loss 2/ stocks
===============================================================================
2018/19 (Estimated)
World 80.94 118.87 42.46 122.31 42.10 0.33 77.53
World Less China 42.92 91.12 33.71 82.31 41.95 0.33 43.16
United States 4.30 18.37 0.01 3.10 14.75 0.17 4.65
Total Foreign 76.64 100.50 42.45 119.21 27.35 0.16 72.88
Major exporters 4/ 26.94 54.88 2.19 33.86 23.40 0.02 26.73
Major importers 8/ 47.86 42.70 37.72 81.13 2.78 0.14 44.23
2017/18
World 80.31 123.78 41.02 122.68 41.02 0.47 80.94
World Less China 34.39 96.28 35.29 81.68 40.89 0.47 42.92
United States 2.75 20.92 3/ 3.23 15.85 0.30 4.30
Total Foreign 77.56 102.86 41.02 119.45 25.17 0.17 76.64
Major exporters 4/ 21.94 57.10 2.46 32.75 21.79 0.02 26.94
Major importers 8/ 54.17 42.93 35.91 82.66 2.34 0.15 47.86
===============================================================================
1/ Marketing year beginning August 1. Totals may not add exactly and trade
may not balance due to rounding and other factors. 2/ Generally
reflects cotton lost or destroyed in the marketing channel; for Australia
Brazil China and the United States reflects the difference between
implicit stocks based on supply less total use and indicated ending
stocks. 3/ Less than 5 000 bales. 4/ Includes Egypt and Syria in
addition to the countries and regions listed. 5/ Azerbaijan Kazakhstan
Kyrgyzstan Tajikistan Turkmenistan and Uzbekistan. 6/ Benin Burkina
Faso Cameroon Central African Republic Chad Cote d’Ivoire Mali Niger
Senegal and Togo. 7/ Argentina Australia Brazil Lesotho South
Africa Tanzania Zambia and Zimbabwe. 8/ In addition to the countries
and regions listed includes Japan Russia South Korea and Taiwan. 9/
Includes intra-EU trade.

FCOJ
General Comments: FCOJ was a little higher as USDA maintained strong production estimates above 71 million boxes. The weather is a little dry in Florida, but speculators are preparing for the hurricane season and have been buying futures. The season started on June 1. Trends are sideways to down on the daily charts and sideways weekly charts as the market looks at a big orange crop and weak demand for FCOJ. USDA production estimates are above 70 million boxes and represent a remarkable recovery from the greening disease and the small crops of just a couple of years ago. Inventories in Florida are still 17% above a year ago. That means that there should be no shortage of oranges available to the market to make FCOJ. The increase is coming from less demand along with the increased domestic production. Fruit for the next crop is developing and are as big as golf balls. Crop conditions are called good. Irrigation is being used a few times a week to help protect crop condition. Mostly good conditions are reported in Brazil as the harvest there is active.
Overnight News: Florida should get mostly dry weather today and tomorrow, then showers and storms. Temperatures will average near to above normal. Brazil should get scattered showers late this week and below normal temperatures.
Chart Trends: Trends in FCOJ are mixed to down with objectives of 88.00, 85.00, and 81.00 July. Support is at 100.00, 97.00, and 95.00 July, with resistance at 105.00, 108.00, and 113.00 July.

DJ USDA Crop Production: U.S. Citrus Fruits – Jun 11
Citrus Fruits: Utilized Production by Crop, State, and
United States, Forecasted Jun 1, 2019
(The crop year begins with the bloom of the first year shown and ends
with the completion of harvest the following year.)
=========================================================================
Utilized Production Utilized production
Boxes 1/ Ton Equivalent
Crop and State ======================================================
2017-18 2018-19 2017-18 2018-19
=========================================================================
=== 1,000 Boxes === ==== 1,000 Tons ===
=========================================================================
Oranges
California, all 45,400 49,000 1,816 1,960
Early, mid, and Navel 3/ 35,900 40,000 1,436 1,600
Valencia 9,500 9,000 380 360
Florida, all 45,050 71,400 2,028 3,213
Early, mid, and Navel 3/ 18,950 30,400 853 1,368
Valencia 26,100 41,000 1,175 1,845
Texas, all 2/ 1,880 1,875 80 79
Early, mid, and Navel 3/ 1,530 1,300 65 55
Valencia 350 575 15 24
United States, all 92,330 122,275 3,924 5,252
Early, mid, and Navel 3/ 56,380 71,700 2,354 3,023
Valencia 35,950 50,575 1,570 2,229
Grapefruit
California 2/ 4,000 4,000 160 160
Florida, all 3,880 4,510 165 192
Red 3,180 3,740 135 159
White 700 770 30 33
Texas 2/ 4,800 6,300 192 252
United States 12,680 14,810 517 604
Tangerines and mandarins 4/
California 2/ 19,200 22,000 768 880
Florida 750 990 36 47
United States 19,950 22,990 804 927
Lemons 2/
Arizona 1,000 1,300 40 52
California 21,200 20,000 848 800
United States 22,200 21,300 888 852
========================================================================
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 an earlier 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 lower again yesterday on what appeared to be speculative and producer selling. The producers are trying to sell and fix some Coffee after the recent rally, but have started to pull back after the losses in futures this week. Speculators noted the weakening Real and strong exports for May from Brazil. The Brazil harvest is moving along at a slow pace. Reports indicate that the yields are not real strong and that the quality of the crop is poor due to extreme weather seen early in the growing season. IBGE said that production next year might only total 52.6 million bags, from 53.9 million last month. Vietnam is also reporting lower yields for the current crop as the weather was not good for flowering earlier in the year. There have been some hot and dry spells that have hurt yield and quality for these crops as well. Even so, the market in London has been under selling pressure due in part to increased offers from Brazil. Buyers are now more actively pursuing other origins, especially for certified or higher end coffees. The charts show that both markets could trade in a sideways pattern for now as the market looks at weather and production potential of the next crop.
Overnight News: ICE certified stocks are little changed today at 2.383 million bags. The ICO daily average price is now 97.41 ct/lb. Brazil will get mostly dry conditions, with near to above normal temperatures. Vietnam will see scattered showers and storms.
Chart Trends: Trends in New York are mixed to down with objectives of 88.00, 85.00, and 81.00 July. Support is at 97.00, 95.00, and 90.00 July, and resistance is at 100.00, 103.00 and 106.00 July. Trends in London are mixed to down with objectives of 1380 and 1340 July. Support is at 1380, 1360, and 1330 July, and resistance is at 1420, 1440, and 1460 July.

DJ Brazil Coffee Exports Rise to 3.5 Million Bags in May –Cecafe
By Jeffrey T. Lewis
SAO PAULO–Brazilian coffee exports rose in May from a year earlier, boosted by record production in the 2018 growing season.
The South American country exported 3.5 million 132-pound bags of coffee last month, more than double the 1.7 million bags sold abroad in the same month a year earlier, exporters group Cecafe said Monday.
Sales abroad of the arabica variety of coffee rose 96% to 2.8 million bags, while exports of robusta beans increased to 376,257 bags in May from 46,621 bags a year earlier.
Brazil is the world’s biggest producer and exporter of coffee and has been gaining market share recently. Brazilian coffee farmers grew a record crop of 61.7 million bags in 2018.
Coffee production in Brazil has a two-year cycle in which even-numbered years produce bigger crops of the arabica variety and then smaller crops in odd-numbered years, when the plants recover.
Production in 2018 was also helped by the recovery of the robusta crop following a drought in the state of Espirito Santo, which grows most of Brazil’s robusta coffee.
Exports of roasted, ground and instant coffee rose 35% in May to 326,885 bags, Cecafe said.

SUGAR
General Comments: Futures closed higher in both London and New York. Part of the rally was in response to the stronger Brazilian Real and part of the rally came from fears of production losses in India due to the delayed monsoon. The Real strength has the chance to make Brazilian Sugar costlier in the world market. but mills in Brazil seem more interested in producing Ethanol anyway. Processing of Sugarcane in Brazil has been off to a slow start and there are some ideas that Sugarcane production was not all that strong this year due to uneven weather. Processing is increasing now as the harvest finally starts to really get going. The fundamentals still suggest big supplies, and the weather in Brazil has improved to support some of the big production ideas. Demand seems to be average and routine. There are concerns that the Indian monsoon will not be strong this year and that Sugarcane production could be hurt. It is hot and dry there so far, but there are signs that the monsoon is ready to develop. Even so, there are now a lot of private forecasts that June rains in both India and Pakistan will be below average. The government weather services there is looking for a normal monsoon, but many private forecasters expect less rain and warmer temperatures than normal. Very good conditions are reported in Thailand. Demand for Sugar has been average, 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 up with objectives of 1290 and 1370 July. Support is at 1210, 1200, and 1180 July, and resistance is at 1250, 1300, and 1330 July. Trends in London are mixed to up with objectives of 346.00 and 362.00 August. Support is at 332.00, 329.00, and 325.00 August, and resistance is at 337.00, 339.00, and 345.00 August.

U.S. Sugar Supply and Use 1/
================================================================================
2017/18 2018/19 Est. 2019/20 Proj. 2019/20 Proj.
Item May Jun
================================================================================
1000 Short Tons, Raw Value
Beginning Stocks 1876 2008 1505 1526
Production 2/ 9293 8948 9115 9138
Beet Sugar 5279 4920 5114 5154
Cane Sugar 4014 4028 4001 3985
Florida 1983 2005 2051 2051
Hawaii 0 0 0 0
Louisiana 1862 1875 1800 1800
Texas 169 148 150 134
Imports 3277 2875 3219 3219
TRQ 3/ 1663 1538 1381 1381
Other Program 4/ 326 350 350 350
Other 5/ 1287 987 1488 1488
Mexico 1223 897 1418 1418
Total Supply 14445 13831 13839 13883
Exports 170 35 35 35
Deliveries 12185 12270 12320 12320
Food 12048 12125 12175 12175
Other 6/ 137 145 145 145
Miscellaneous 82 0 0 0
Total Use 12438 12305 12355 12355
Ending Stocks 2008 1526 1484 1528
Stocks to Use Ratio 16.1 12.4 12.0 12.4
================================================================================

Mexico Sugar Supply and Use and High Fructose Corn Syrup Consumption 1/
================================================================================
Supply Use
Fiscal Beginning Produc- Imports Domestic Exports Ending
Year Stocks tion 2/ Stocks
================================================================================
1000 Metric Tons, Actual Weight
Sugar
2018/19 Est.
May 1395 6200 70 4716 1954 995
Jun 1395 6400 70 4716 2153 995
2019/20 Proj.
May 995 6100 70 4776 1394 995
Jun 995 6183 70 4776 1476 995
================================================================================
WASDE – 589 – 17 June 2019

DJ Brazilian Mills Increased Sugar Production in Late May: S&P Survey — Market Talk
0825 GMT – Mills in Brazil’s key Center-South region increased sugar production in the second half of May, according to a survey of analysts by S&P Global Platts. UNICA, the industry association, is expected to release its widely followed report for the period this week. It will show that the proportion of cane turned into sugar, as opposed to ethanol, rose to 36.4% from 36.2% in the first half of May, the analysts forecast. “If the estimates prove correct, it would be the highest sugar production for a 15-day period since the first half of September 2018,” S&P says. However, cumulative sugar production since April would still be 12.7% lower than at the same stage last year. (joe.wallace@wsj.com)

DJ Sugar Market Set to Slip Into Deficit in 2019-20: ISO
By Joe Wallace
Lower sugar output in Brazil and some other key producers will pull down the surplus in global supplies in the 2018-19 season and lead to a deficit in 2019-20, the International Sugar Organization said Monday.
World output of sugar will fall by 2.5% to 178.7 million tons in 2018-19 while consumption will grow by 1.6% to 176.9 million tons, the ISO said in a quarterly outlook. That would lead to a surplus of 1.8 million tons, an 80% decline from the surplus of 9.1 million tons seen in 2017-18.
The ISO tentatively forecasts an end to sugar surpluses in 2019-20, predicting that demand will outweigh production by around 3 million tons, and that continued growth in consumption will widen that gap to roughly 6 million tons the following year.
The forecasts add to evidence that sugar markets are tightening after years of oversupply that have pushed raw prices down to levels rarely seen since the financial crisis, hurting farmers, mills and trading houses. Sugar output has outstripped demand for six of the past eight years.
Still, the ISO cautioned that the pain for these groups may not be over even if the market slips into a deficit next year, since large inventories accumulated during surplus years will continue to hang over prices.
“High accumulated stocks still need to be absorbed before prices can return to more remunerative levels for producers,” the ISO said. “The immediate fundamentals are clearly bearish, and against this background, it is hard to be optimistic regarding the future of sugar prices in the remaining part of the October/September cycle.”
The ISO noted that its projected surplus for 2018-19, while considerably smaller than last year’s, is still higher than the 0.6 million ton surplus it forecast back in February.
The main decline in output this year will come in second-largest producer Brazil, the ISO said, forecasting an 8% fall to 29.1 million tons from 31.8 million tons in 2017-18.
Rising output in India, the world’s largest sugar producer, will partially offset that. The ISO predicts that Indian sugar production will increase by 1.9% to 33 million tons, from 32.4 million tons in 2018-19.
Thailand is also seeing “spectacular results,” the ISO said, forecasting near-record output of 14.6 million tons.

COCOA
General Comments: Futures closed mostly higher in New York and higher in London. Both markets made new highs for the move on disease concerns for the West African crop. Ghana Cocoa authorities noted disease problems in its crop and said that mid crop production could be hurt. The disease could hurt the mid crop and probably will affect the next main crop that will be harvested at the end of the year. The mid crop harvest is winding down in West Africa and reports are generally positive, although some Nigerian producers have complained that the weather is not giving them the best conditions for top yields. Ivory Coast arrivals are strong as are exports. Demand appears strong. Growing conditions are generally good in West Africa. Periods of 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. Indonesia reported sharply reduced exports for last month.
Overnight News: Scattered showers and storms are expected in West Africa. Temperatures will average 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 higher today at 4.607 million bags.
Chart Trends: Trends in New York are up with objectives of 2570 July. Support is at 2470, 2450, and 2400 July, with resistance at 2580, 2600, and 2630 July. Trends in London are up with objectives of 1850 July. Support is at 1820, 1800, and 1780 July, with resistance at 1860, 1870, and 1900 July.

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