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 Global Food Prices Fall For Third Month as Coronavirus Saps Demand
By Will Horner
Global food prices fell in April to their lowest level in 15 months, the United Nations’ Food and Agriculture Organization said Thursday, as the coronavirus pandemic prompted a sharp drop in demand while national lock down created logistical challenges for food-supply chains.
The UN FAO’s Food Price Index dropped to 165.5 points, a 3.4% fall from March and its third consecutive monthly decline.
While the price of all foodstuffs tracked by the index fell, declines were steepest for sugar prices. The FAO’s Sugar Price subindex fell 14.6% from March to a 13-year low.
Sugar prices have dropped dramatically in recent weeks as oil prices have crashed, knocking demand for bio fuel ethanol which is made from sugar, and driving sugar mills to produce more of the sweetener which in turn drags down prices.
Stay-at-home measures put in place across the world to slow the spread of the virus had hit demand for meat and driven a 2.7% decline in the FAO’s Meat Price subindex, the FAO said.
“The pandemic is hitting both the demand and supply sides for meat, as restaurant closures and reduced household incomes lead to lower consumption and labor shortages on the processing side are impacting just-in-time production systems in major livestock producing countries,” Upali Galketi Aratchilage, senior economist at the FAO, said.
The FAO’s index also registered a 5.2% month-on-month drop in vegetable-oil prices and a 3.6% drop in dairy prices.
General Comments Cotton was higher on hopes for improved export demand in the USDA reports that were released this morning. The world is starting to slowly recover from the Coronavirus scare and some stores are starting to open again after being closed for weeks. The hope is that consumer demand for Cotton products will quickly return, but this is not likely to be the case. Consumers have really been hurt economically due to stay at home orders imposed here and overseas and it will take some time for them to recover. As an example, Chinese stores have been open for several weeks but there has been no consumer rush to go to them and buy. The same is possible here and in Europe. It is getting too dry in Brazil for good growth of the second crop.
Overnight News: The Delta and Southeast will get mostly dry conditions, but a few showers are possible on Friday. Temperatures should be mostly near to below normal in the Southeast and near to above normal in the Delta. Texas will have dry conditions through the weekend. Temperatures will average near to below normal. The USDA average price is now 49.80 ct/lb. ICE said that certified stocks are now 3,579 bales, from 3,579 bales yesterday. ICE said that 0 notices were posted for delivery against May contracts and that total deliveries for the month are now 10 contracts. USDA said that net Upland Cotton export sales were 370,300 bales this year and 55,900 bales next year. Net Pima sales were 2,400 bales this year and 0 bales next year.
Chart Trends: Trends in Cotton are mixed to down with objectives of 5310 and 4970 July. Support is at 5320, 5300, and 5090 July, with resistance of 5580, 5660 and 5800 July.
General Comments: FCOJ was higher and trends are still up in the market. Support is coming from the continued effects from the Coronavirus that are keeping people at home and drinking Orange Juice. Demand from grocery stores has remained strong in response to the increased consumer demand. Supplies available to the market are somewhat reduced. Inventories in cold storage remain solid so there will be FCOJ to meet the demand. The weather in Florida has become a mixed bag over the last few weeks. It had been very hot and dry in south Florida but the north got a lot of rain. The south has now turned cooler but remains mostly dry. The mid season Oranges harvest is diminishing. Irrigation has been run several times per week in most areas. Color break is reported on late variety Oranges. More signs of early bloom and new growth on trees are reported. Favorable weather is reported in Brazil but current dry conditions are increasing irrigation needs.
Overnight News: Florida should get mostly dry conditions until moderate to heavy rain appears on Sunday. Temperatures will average near to below normal. Brazil should get isolated showers and near to above normal temperatures. ICE said that 0 delivery notices were posted against May contracts and that total deliveries for the month are 0 contracts.
Chart Trends: Trends in FCOJ are mixed to up with objectives of 123.00 July. Support is at 117.00, 115.00, and 112.00 July, with resistance at 121.00, 124.00, and 127.00 July.
DJ USDA to Buy $25M of Orange Juice, Industry Group Says — Market Talk
15:46 ET – USDA food purchases this summer will include $25M worth of orange juice, according to Florida Citrus Mutual. Summer is usually a low point for OJ sales, but worries about the Covid-19 could prompt shoppers to put OJ in their carts. The most recent report by Nielsen, covering most of March, showed 44.05M gallons were sold, the highest in at least two and a half years. (email@example.com)
General Comments: Futures were mixed in New York and marginally higher in London. New York was mixed as some states in the US started to lift their Coronavirus restrictions that have depressed consumer and roaster demand in the US and Europe. The demand from coffee shops and other food service operations has dropped to almost nothing. Consumers are still drinking Coffee at home, but many smaller roasters are actively trying to unload green coffee already bought a there are no outlets for sales at this time to coffee shops and other higher end retailers. The logistics of moving Coffee from Central and South America remain difficult. Producers have had trouble getting workers to pick the cherries and mills and processors have had trouble getting workers to staff the plants. Shipping logistics have improved somewhat, but many are still having trouble getting the Coffee to ports to move to consumer nations.
Overnight News: ICE certified stocks are lower today at 1.804 million bags. The ICO daily average price is now 106.70 ct/lb. Brazil will get dry conditions or isolated showers with near to below normal temperatures by this weekend. Vietnam will see light to moderate showers. ICE said that 0 notices were posted for delivery against May futures and that total deliveries for the month are now 438 contracts.
Chart Trends: Trends in New York are mixed to up with objectives of 113.00 and 118.00 July. Support is at 107.00, 103.00, and 102.00 July, and resistance is at 112.00, 115.00 and 119.00 July. Trends in London are mixed to up with objectives of 1220 July. Support is at 1190, 1150, and 1110 July, and resistance is at 1210, 1230, and 1250 July.
General Comments: New York and London closed lower in sympathy with the lower prices in world petroleum markets. Prices in petroleum futures still have a long way to go before Ethanol processing becomes profitable again, but prices in the sector seem to be trending higher overall. More Sugarcane is now available for processing into Sugar. The Brazil mills are trying to cover the lack of White Sugar in the market and have shifted to Sugar at the expense of Ethanol production due to the difference in prices and profitability. Reports indicate that little is on offer from India in part due to logistical and harvest problems caused by the Coronavirus. Thailand might also have less this year due to reduced planted area and erratic rains during the monsoon season.
Overnight News: Brazil will get mostly dry conditions. Temperatures should average near normal.
Chart Trends: Trends in New York are mixed. Support is at 1050, 1020, and 990 October, and resistance is at 1120, 1160, and 1180 October. Trends in London are mixed to up with objectives of 379.00 and 408.00 August. Support is at 340.00, 328.00, and 323.00 August, and resistance is at 358.00, 361.00, and 367.00 August.
General Comments: New York was lower and London closed higher in range trading. The Coronavirus has complicated farming and marketing efforts. Ideas are that deliveries can be slower on any contracted Cocoa and that the next crop could suffer as workers stay away. The Coronavirus helps keep demand away and helps keep workers from grinding facilities and chocolate manufacturers. Harvest is now over for the main crop in West Africa and the results so far are very good. Ideas are that demand is less than before due to the Coronavirus problems in Europe, but Europe and North America are now starting to slowly reopen and demand can increase. The reports from West Africa imply that a big harvest in the region, but there are indications that earlier dry weather could affect yields. The weather in Ivory Coast and the rest of West Africa currently is good. Brazil could be seeing stress from dry conditions.
Overnight News: Isolated to scattered showers are forecast for West Africa. Temperatures will be 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 4.341 million bags. ICE said that 0 notices were posted for delivery against May NY contracts and that total deliveries for the month are now 95 contracts.
Chart Trends: Trends in New York are mixed. Support is at 2340, 2310, and 2300 July, with resistance at 2420, 2520, and 2580 July. Trends in London are mixed. Support is at 1880, 1860, and 1850 July, with resistance at 1920, 1950, and 1970 July.