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: Futures were higher on Friday in recovery trading, but lower for the week. Trends are mixed on the daily and weekly charts, but the weekly charts show an upside bias. The Fed signaled last week it was becoming more concerned about inflation. Many agricultural products including Cotton got hit hard as funds sold in response to the Fed statements. Cotton growing conditions have improved with rains reported in West Texas and the Delta. West Texas and the Delta are now too wet, but are expected to dry down a bit this week. Some very beneficial rains are in the forecast for late this week or this weekend in the Southeast. Production ideas are being impacted in just about all areas due to the weather extremes.
Overnight News: The Delta will get scattered showers and near to above normal temperatures and Southeast will get scattered to isolated showers and near to above normal temperatures. Texas will have mostly dry conditions and near to above normal temperatures. The USDA average price is now 82.00 ct/lb. ICE said that certified stocks are now 166,187 bales, from 166,187 bales yesterday.
Chart Trends: Trends in Cotton are mixed. Support is at 8360, 8310, and 8180 July, with resistance of 8590, 8660 and 8740 July.

FCOJ
General Comments: FCOJ closed lower and chart trends are still mixed on the daily charts but down on the weekly charts. The hurricane season is here and a big storm could threaten trees and fruit. The only storm near anything is in the Gulf but too far west to affect the state of Florida. 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 trees and fruit are stressed, but rains are starting to be reported in the region. 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 but there is some potential for some rains over the next couple of weeks.
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 mixed. Support is at 116.00, 11.300, and 112.00 July, with resistance at 120.00, 122.00, and 126.00 July.

COFFEE
General Comments: Both markets were higher to finish the week, but both markets were lower for the week. Trends on the daily and weekly charts have turned down in New York but London remains mostly in a trading range. The weekly New York chart shows that the price action last week was more of a correction in the longer term up move than anything else and that futures are currently at weekly chart support levels. It looks like demand is much better for Robusta these days, and the offers are starting to increase as the Arabica harvest is expanding in Brazil. Wetter conditions are in the forecast for these areas this week. The daily charts show mixed trends. Good conditions are reported in northern South America and improved conditions reported in Central America. Colombia is having trouble exporting Coffee right now due to protests inside the country. Conditions are reported to be generally good in Asia and Africa.
Overnight News: ICE certified stocks are higher today at 2.162 million bags. The ICO daily average price is now 136.25 ct/lb. Brazil will get mostly dry conditions or isolated showers with near to above normal temperatures. Central America will get scattered showers. Vietnam will see scattered showers.
Chart Trends: Trends in New York are mixed to down with objectives of 146.00, 140.00, and 135.00 July. Support is at 146.00, 143.00, and 140.00 July, and resistance is at 151.00, 155.00 and 157.00 July. Trends in London are mixed. Support is at 1560, 1530, and 1520 July, and resistance is at 1600, 1620, and 1690 July.

DJ ICE Commitments: ICE Europe Robusta Coffee Futures/Options
Commitments of Traders-Options and Futures
Combined Positions as of 06/15/2021
Reportable Positions
===============================================================================
Producer/Merchant/ Swap Dealers
Processor/User
OI Long Short Long Short Spreading
===============================================================================
ICE Futures Europe
151,797 46,520 88,471 9,545 12,593 4,296
Percent of Open Interest Represented by each Category of Trader
100% 30.6% 58.3% 6.3% 8.3% 2.8%
Number of Traders in Each Category
159 48 46 12 6 8
Reportable Positions
===============================================================================
Managed Money Other Reportables
Long Short Spreading Long Short Spreading
===============================================================================
38,076 4,718 12,576 10,014 1,937 24,721
Percent of Open Interest Represented by Each Category of Trader
25.1% 3.1% 8.3% 6.6% 1.3% 16.3%
Number of Traders in Each Category
43 9 23 17 13 23
Nonreportable Positions
=======================
Long Short
=======================
6,049 2,485
Percent of Open Interest Represented by Each Category of Trader
4.0% 1.6%

SUGAR
General Comments: New York and London were lower with London the leader on ample supplies of White Sugar available to the market and forecasts for improved growing conditions in Brazil. The weekly charts show down trends in both markets. There is plenty of White Sugar available in India for the market and monsoon rains are promoting good conditions for the next crop. Southern growing areas of Brazil are getting some beneficial showers, with Parana and parts of Sao Paulo getting the best rains. Production has been hurt due to dry weather earlier in the 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 near to above normal.
Chart Trends: Trends in New York are down with objectives of 1630 October. Support is at 1670, 1640, and 1610 October, and resistance is at 1710, 1760, and 1790 October. Trends in London are down with objectives of 404.00 and 402.00 August. Support is at 422.00, 418.00, and 416.00 August, and resistance is at 435.00, 440.00, and 445.00 August.

DJ Sugar Falls Below Ethanol Parity Level
By Will Horner
Sugar prices dropped below a crucial technical indicator last week, suggesting Brazilian mills could cut down on sugar output in favor of ethanol, according to calculations by the Wall Street Journal.
New York-traded sugar futures closed last week at 16.66 U.S. cents a pound. That was below the ethanol parity rate for just the second time since March last year, when the coronavirus pandemic roiled global markets.
Mills in Brazil, one of the world’s largest producers of the sweetener, can produce both ethanol and sugar from the nation’s sugar cane crop. Brazilian mills tend to increase the output of one at the expense of the other depending on which is most profitable.
Such changes in Brazilian sugar supply can impact global sugar prices, and the industry and market watchers use the ethanol parity level to judge whether mills might alter their output to either increase or decrease sugar production. The ethanol parity level factors in Brazilian ethanol prices, local transport costs, and the strength of the Brazilian real, which hit its highest level in a year last month as the nation’s central bank has raised interest rates.
The ethanol parity level stood at 16.75 cents a pound on Friday, moderately above the sugar price, according to calculations by the Wall Street Journal. It was just the second week that sugar prices fell below the parity level since March. Prices briefly slipped below the level for one week last month.
Since March 2020 when the coronavirus first hit, sinking demand for ethanol and with it ethanol prices, sugar has been trading significantly above the ethanol parity rate. This gave Brazilian mills a strong incentive to produce more sugar, leading to greater supply.
With Brazilian ethanol prices climbing steadily since, sugar prices have been trading close to the ethanol parity level, meaning there is no longer a strong incentive for Brazilian mills to favor sugar output. If ethanol prices continue to rise, it could drive less sugar output and potentially lift sugar prices.
Any move by Brazilian mills to reduce sugar output even slightly could mean a much smaller Brazilian sugar crop than in previous years, just as markets are tight, said Robin Shaw, sugar analyst at brokerage Marex Spectron. Drought conditions have already harmed cane harvests in Brazil this year, while Chinese demand has been strong. However, so far mills seem reluctant to reduce sugar output as they wait to see if sugar prices will remain below the ethanol parity level, he said.
“We have not heard of a single mill which has switched its sugar mix in favor of ethanol,” he said. “Presumably, they are waiting to see if the current ethanol/sugar price ratio will become a solid fact.”

DJ ICE Commitments: ICE Europe White Sugar Futures/Options
Commitments of Traders-Options and Futures
Combined Positions as of 06/15/2021
Reportable Positions
===============================================================================
Producer/Merchant/ Swap Dealers
Processor/User
OI Long Short Long Short Spreading
===============================================================================
ICE Futures Europe
84,950 37,000 66,652 11,834 2,478 2,285
Percent of Open Interest Represented by each Category of Trader
100% 43.6% 78.5% 13.9% 2.9% 2.7%
Number of Traders in Each Category
112 34 37 12 3 7
Reportable Positions
===============================================================================
Managed Money Other Reportables
Long Short Spreading Long Short Spreading
===============================================================================
20,679 3,103 4,622 1,868 875 1,340
Percent of Open Interest Represented by Each Category of Trader
24.3% 3.7% 5.4% 2.2% 1.0% 1.6%
Number of Traders in Each Category
22 12 11 9 2 8
Nonreportable Positions
=======================
Long Short
=======================
5,322 3,595
Percent of Open Interest Represented by Each Category of Trader
6.3% 4.2%

COCOA
General Comments: New York was lower in range trading last week but London was near unchanged. A strong US Dollar late in the week hurt New York prices and helped in London. 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, but above average rains were reported in West Africa last week. European demand has been slow. Asian demand is improved. North American is improved. 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 higher today at 5.708 million bags. ICE said that 0 contracts were posted for July delivery and that total deliveries for the month are now 198 contracts.
Chart Trends: Trends in New York are down with objectives of 2340 and 2280 September. Support is at 2350, 2330, and 2300 September, with resistance at 2400, 2450, and 2480 September. Trends in London are mixed. Support is at 1610, 1600, and 1590 September, with resistance at 1640, 1650, and 1670 September.

DJ ICE Commitments: ICE Europe Cocoa Futures/Options
Commitments of Traders-Options and Futures
Combined Positions as of 06/15/2021
Reportable Positions
===============================================================================
Producer/Merchant/ Swap Dealers
Processor/User
OI Long Short Long Short Spreading
===============================================================================
ICE Futures Europe
266,601 171,964 169,737 27,676 18,091 12,316
Percent of Open Interest Represented by each Category of Trader
100% 64.5% 63.7% 10.4% 6.8% 4.6%
Number of Traders in Each Category
128 46 34 12 5 11
Reportable Positions
===============================================================================
Managed Money Other Reportables
Long Short Spreading Long Short Spreading
===============================================================================
7,871 23,042 11,861 4,962 445 27,767
Percent of Open Interest Represented by Each Category of Trader
3.0% 8.6% 4.4% 1.9% 0.2% 10.4%
Number of Traders in Each Category
15 20 8 14 7 20
Nonreportable Positions
=======================
Long Short
=======================
2,184 3,342
Percent of Open Interest Represented by Each Category of Trader
0.8% 1.3%

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