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-Price Rally Accelerated in May
By Will Horner
Global food prices jumped at their fastest rate in more than a decade in May, the United Nations’ Food and Agriculture organization said Thursday, building on a yearlong rally in the price of basic foodstuffs that shows no signs of slowing.
The FAO’s Food Price Index rose to 127.1 points in May, 4.8% higher than in the previous month and nearly 40% higher than May 2020.
The index, which tracks the prices of the most commonly traded food-commodities, has now risen for 12 consecutive months and is at its highest level since September 2011.
Sugar, vegetable oils and cereals had the largest price increases in May on a combination of supply disruptions and strong demand, the FAO said.
Cereal prices rose 6%, led largely by corn, which has been affected by dry weather in growing regions and strong demand from China.
Vegetable oil prices jumped 7.8%, driven by rising palm, soy and rapeseed oil prices. Palm oil prices have been lifted by slow supply from Southeast Asian producing nations and strong demand.
Sugar prices rose 6.8% amid harvest delays in top producer Brazil.
Gains for meat and dairy prices were more modest at 2.2% and 1.8%, respectively.
General Comments: Futures were lower yesterday in correction trading. Trends are still up on the daily charts. There are forecasts for hot and dry weather in just about all major US growing areas this week. Cotton growing conditions have improved with rains reported in West Texas and the Delta. The forecasts for the Panhandle region of Texas are now turning dry again and it could turn hot. It is drier in the Southeast production areas. The Southeast needs to be watched as conditions there could turn too hot and dry. Delta crop conditions are called good. Ideas are that Cotton demand can hold strong with production problems noted elsewhere in the world, especially in India.
Overnight News: The Delta will get scattered showers and near to below normal temperatures and Southeast will get isolated showers and near normal temperatures. Texas will have isolated showers and below normal temperatures. The USDA average price is now 79.59 ct/lb. ICE said that certified stocks are now 146,886 bales, from 146,886 bales yesterday.
Chart Trends: Trends in Cotton are up with objectives of 8570, 8850, and 10010 July. Support is at 8280, 8160, and 8120 July, with resistance of 8480, 8610 and 8650 July.
General Comments: FCOJ closed a little higher once again and chart trends are up. The weather in Florida is good with isolated showers. The hurricane season is coming and a big storm could threaten trees and fruit. An active season is anticipated but that does not mean a big and damaging storm is coming. It does mean that the market will be on alert if one does show up. It is dry in Brazil and crop conditions are called good even with drier than normal soils. Stress to trees could return if the dry weather continues as is in the forecast. Mexican crop conditions in central and southern areas are called good with rains, but earlier dry weather might have hurt production. It is dry in northern and western Mexican growing areas.
Overnight News: Florida should get scattered showers. Temperatures will average near normal. Brazil should get mostly dry conditions and above normal temperatures.
Chart Trends: Trends in FCOJ are up with objectives of 121.00, 126.00, and 140.00 July. Support is at 119.00, 117.00, and 115.00 July, with resistance at 120.00, 122.00, and 126.00 July.
General Comments: New York and London traded higher as the growing conditions around the world remained difficult. The return of dry and hot weather to some of the Brazil growing area was the reason for the buying, but reports of beneficial rains in parts of southern Minas Gerais in the last week were noted. London was higher as Vietnam and Brazil Robusta areas stayed dry. The daily and weekly charts show up trends now in both markets and both markets have cleared some important resistance areas on the weekly charts. Most Brazil Coffee areas should stay dry for at least the next week although a few showers are possible in southern Minas Gerais again. Fears of dry weather impacting the Brazil production continued to support prices overall. It will be cool, but not cold. It is also the second year of the production cycle so production will be less, anyway. Production conditions elsewhere in Latin America are mixed with good conditions reported in northern South America and improved conditions reported in Central America. Conditions are reported to be generally good in Asia and Africa. Its turning a little dry in Southeast Asia including Vietnam, but a storm brought some beneficial precipitation in recent days.
Overnight News: ICE certified stocks are higher today at 2.079 million bags. The ICO daily average price is now 144.06 ct/lb. Brazil will get mostly dry conditions or isolated showers with above normal temperatures. Central America will get scattered showers. Vietnam will see scattered showers.
Chart Trends: Trends in New York are up with objectives of 169.00 July. Support is at 159.00, 155.00, and 153.00 July, and resistance is at 166.00, 169.00 and 172.00 July. Trends in London are up with objectives of 1660 July. Support is at 1560, 1530, and 1520 July, and resistance is at 1630, 1660, and 1690 July.
General Comments: New York and London were both mostly a little higher on follow through buying and trends are up on the daily carts. Nearest futures were a little lower in both markets. The weather in Brazil remains difficult for the best production of Sugarcane this year. Demand for ethanol should be increasing and could divert the cane processing to production of the ethanol and away from Sugar. There is plenty of White Sugar available in India for the market. Fears of dry Brazilian weather continued, but southern growing areas are getting some beneficial rains, with Parana and parts of Sao Paulo getting the best rains. Production has been hurt due to dry weather earlier in the year. The seasonal crush is off to a slow start and Sugar content of the cane is reduced in initial industry reports from the center-south of Brazil. India is exporting Sugar and is reported to have a big cane crop this year. Thailand is expecting improved production after drought induced yield losses last year. Ethanol demand is returning to the market as more world economies open up after the pandemic.
Overnight News: Brazil will get mostly dry conditions or isolated showers. Temperatures should average above normal.
Chart Trends: Trends in New York are up with objectives of 1810, 1860, and 1870 July. Support is at 1740, 1710, and 1690 July, and resistance is at 1820, 1830, and 1880 July. Trends in London are up with objectives of 477.00 and 493.00 August. Support is at 459.00, 458.00, and 447.00 August, and resistance is at 470.00, 482.00, and 486.00 August.
General Comments: New York and London closed lower on follow through selling. The daily charts show sideways or down trends in both markets. The harvests are over in West Africa and ports there have been filled with Cocoa. The weather has been a little too dry for best production prospects for the next crop. European demand has been slow as the quarterly grind data showed a 3% decrease from a year ago in grindings. This has been caused by less demand created by the pandemic. Asian demand improved. North American data showed improved demand. The supplies are there for any increased demand.
Overnight News: Isolated showers are forecast for West Africa. Temperatures will be 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 sharply lower today at 5.436 million bags.
Chart Trends: Trends in New York are mixed. Support is at 2410, 2390, and 2360 July, with resistance at 2470, 2490, and 2500 July. Trends in London are mixed to down with objectives of 1600 and 1580 July. Support is at 1600, 1580, and 1560 July, with resistance at 1640, 1670, and 1690 July.