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 Surging Palm Oil, Cheese Markets Lift Food Prices to Five-Year High: FAO — Market Talk
1034 GMT – Global food prices soared to a five-year high in December, fueled by rising prices for vegetable oils, sugar and dairy products, according to the UN’s Food and Agriculture Organization. Prices were 2.5% higher in December than November, according to the FAO, meaning they have increased for three consecutive months. Driving the advance: a 9.4% rise in the price of vegetable oils, which reached a 25-month high amid strong demand for palm oil from the biodiesel sector and forecasts for shrinking supplies. Cheese prices surged 8%, boosted by robust imports and tighter supplies from the European Union and Oceania. Rising energy markets helped lift sugar prices by 4.8% by encouraging Brazilian sugar mills to crush cane into ethanol instead of sugar.
General Comments: Cotton was mixed, with nearby months a little higher and deferred months a little lower. The weekly charts indicate bullish trends. A catalyst for the rally has been the trade deal between the US and China. China has also been buying Cotton from the US and Brazil as it needs higher quality Cotton to blend with its domestic production. It did not really buy last week but will probably resume buying once the new trade deal is signed on January 15. The market has not been able to rally a little on the price for the last month. The harvest is now about over and certified stocks are now moving lower.
Overnight News: The Delta and Southeast should see frequent periods of precipitation late this week and this weekend. Temperatures should be mostly above normal. Texas will have mostly dry conditions. Temperatures will average above normal. The USDA average price is now 65.50 ct/lb. ICE said that certified stocks are now 8,890 ba1es, from 8,970 bales yesterday.
Chart Trends: Trends in Cotton are mixed to up with objectives of 7070 and 7510 March. Support is at 6900, 6880, and 6850 March, with resistance of 7030, 7330, and 7440 March.
General Comments: FCOJ was a little lower. Overall chart patterns suggest that the market is still ready to trend lower, but futures held at contract lows a couple of days ago and might turn sideways instead. Good growing conditions and increased oranges production estimates by USDA this season have been bearish. The weather has been great for the trees as there have been frequent periods of showers and no severe storms so far this year. Many areas have been dry lately and harvest is expanding. Crop yields and quality should be high for Florida this year. Inventories of FCOJ in the state are high and are more than 38% above last year.
Overnight News: Florida should get mostly dry conditions. Temperatures will average near to above normal. Brazil should get dry conditions through the weekend and near to above normal temperatures. ICE said that 0 notices were posted for delivery against January contracts and that total deliveries for the month are now 0 contracts.
Chart Trends: Trends in FCOJ are mixed. Support is at 98.00, 95.00, and 92.00 March, with resistance at 100.00, 102.00, and 104.00 March.
General Comments: Futures were lower yesterday and are now lower for six of the past seven sessions in New York. Trends are still down on the daily charts, but the market seems to be oversold and in need of a correction trade higher. The Brazilian crop is developing well despite some reports of drier weather in the main growing areas. Rains earlier in the year were very beneficial and are holding the crop together now. It is dry in other parts of Latin America as well. Central America has had less than normal rains, especially in Honduras. Peru is also too dry right now. Vietnam exports remain behind a year ago, but the market anticipates bigger offers. Vietnamese crops are expected to be big despite uneven growing conditions earlier in the year and rains late in the growing season. ICO exports were 9.3 million bags last month, from 10.2 million the previous year.
Overnight News: ICE certified stocks are higher today at 2.046 million bags. The ICO daily average price is now 110.42 ct/lb. Brazil will get showers and storms into next week with near to above normal temperatures. Vietnam will see mostly dry conditions.
Chart Trends: Trends in New York are down with objectives of 117.00, 115.00, and 105.00 March. Support is at 119.00, 116.00, and 114.00 March, and resistance is at 123.00, 125.00 and 130.00 March. Trends in London are mixed to down with objectives of 1340 and 1260 March. Support is at 1330, 1320, and 1290 March, and resistance is at 1370, 1390, and 1410 March.
General Comments: The markets closed lower again, this time in sympathy with the big weakness in Crude Oil. Crude Oil had rallied on the back of the news of Iran bombing US installations in Iraq but gave back those gains when peace became possible and then moved significantly lower on a big increase in supplies in the US. Reports of a drought in the central-south area of Brazil were met with forecasts for important rains in the next week or so. The dry weather has also caused local Corn prices to move higher, but those might also be able to relax with the improved rains if and when they come. The market appears to be tight around the globe. Reports indicate that little is on offer from India. Thailand might also have less this year due to reduced planted area and erratic rains during the monsoon season. There is still more than enough Sugar for any demand and that India will have to sell sooner or later. Reports from India indicate that the country is seeing relatively good growing conditions and still holds large inventories from last year. However, these supplies are apparently not moving.
Overnight News: Brazil will get scattered showers and storms later in the week. Temperatures should be near to above normal.
Chart Trends: Trends in New York are mixed. Support is at 1340, 1320, and 1310 March, and resistance is at 1380, 1400, and 1410 March. Trends in London are mixed to up with objectives of 368.00 and 379.00 March. Support is at 358.00, 356.00, and 352.00 March, and resistance is at 369.00, 371.00, and 373.00 March.
General Comments: Futures closed lower in both markets. Prices have been cheaper lately based on ideas of very good production potential in West Africa. The weather in Ivory Coast has improved due to reports of frequent showers. Ideas are that the next crop will be good. Drier weather is now more important due to harvest activities. The harvest is ongoing and good progress is expected. The harvest ended early in Nigeria due to reduced planted area and bad weather at harvest time. The weather in Asia is also called good.
Overnight News: Scattered showers and storms are expected in southern sections of West Africa. Temperatures will be on both sides of 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 slightly lower today at 2.803 million bags.
Chart Trends: Trends in New York are mixed. Support is at 2470, 2430, and 2380 March, with resistance at 2550, 2580, and 2610 March. Trends in London are mixed. Support is at 1770, 1740, and 1730 March, with resistance at 1830, 1860, and 1890 March.