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 First Time in a Year
By Will Horner
Global food prices fell in June for the first time in 12 months, the United Nations’ Food and Agriculture Organization said Thursday, halting a long-running uptick that had prompted concerns about food security in the poorest nations.
The FAO’s Food Prices Index fell to 2.5% from its May level to 124.6 points. That marked the first monthly decrease in a year for the benchmark index, which nonetheless remains almost 34% higher than its June 2020 level.
Cereal, vegetable oil, and dairy prices were all lower in June and responsible for pulling down the index which tracks prices of five major food commodities.
Vegetable oil prices tracked by the FAO slumped 9.8% to a four-month low, dragged by declining prices of palm, soy, and sunflower oils, the body said.
Cereals declined 2.6% driven largely by falling corn prices. Stronger than expected corn harvests in Argentina have prompted prices of the grain there to fall, the FAO said.
Dairy prices fell 1% as global import demand for butter fell and inventories grew.
Meat prices bucked the trend and rose for a ninth consecutive month. Meat prices rose by 2.1% in June but remained below their all-time high hit in August 2014.
Sugar prices also rose. Prices for the sweetener gained 0.9% in June amid uncertainty about Brazil’s current crop that has been affected by unfavorable weather.
Food prices have been rallying sharply over the last year, driven by strong demand, supply issues created by the Covid-19 pandemic, and extreme weather conditions that have taken a toll on crops from corn to coffee.
The FAO’s data suggests the rally was cooling, which could ease concerns about food inflation and food security that had been spur by the sharp appreciation in prices.
General Comments: Futures were higher again on weather concerns. News of another tropical system coming into the Southeast helped support futures prices. Elsa is coming and the Southeast is threatened with big rains and perhaps some wind this week. Cotton growing conditions have improved with rains reported in West Texas and less rain the Delta. Texas should get some showers this week. Some scattered showers are in the forecast in the Delta and Southeast but the Southeast is getting heavy rains today. 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 below normal temperatures and Southeast will get scattered showers with some heavy amounts today and near to below normal temperatures. Texas will have scattered showers and below normal temperatures. The USDA average price is now 83.97 ct/lb. ICE said that certified stocks are now 119,966 bales, from 119,966 bales yesterday. ICE said that 0 notices were posted for July delivery and that total deliveries for the month are now 115 contracts.
Chart Trends: Trends in Cotton are mixed. Support is at 8590, 8470, and 8400 December, with resistance of 8790, 8830 and 8930 December.
General Comments: FCOJ closed higher as a tropical system passed very close to the west coast of Florida but did no damage to Citrus. The fear of damage today kept buyers interested. Elsa is currently passing by Florida, but there are not likely to be damaging winds from the system. The state could get excessive rainfall. A big storm could threaten trees and fruit. Brazil is reported to be in good condition, but dry. It has been cold but any damage is called minor. Mexican crop conditions in central and southern areas are called good with rains, but earlier dry weather might have hurt production. Northern and western Mexico are getting some rains and conditions are rated mostly good. Some areas have had too much rain..
Overnight News: Florida should get scattered showers with heavy amounts today. Temperatures will average near normal. Brazil should get mostly dry conditions and near normal temperatures. ICE said that 0 notices were posted for delivery against July contracts and that total deliveries for the month are now 0 contracts.
Chart Trends: Trends in FCOJ are up with objectives of 131.00 September. Support is at 122.00, 121.00, and 120.00 September, with resistance at 128.00, 130.00, and 132.00 September.
General Comments: New York and London both closed higher yesterday. There were more reports of cold weather in Brazil last week that did little damage to Coffee. Temperatures are now warmer and there are no forecasts for damaging cold for a while. Asian Coffee areas are dry, especially in Southeast Asia. The move in New York comes as the Brazil crop is coming to the market. The offers are starting to increase as the Arabica harvest is expanding in Brazil. The Robusta harvest is active in Brazil as well. Good conditions are reported in northern South America and good conditions reported in Central America. Colombia is having trouble exporting Coffee due to protests inside the country. Conditions are reported to be generally good in Asia and Africa although Southeast Asia is turning drier.
Overnight News: ICE certified stocks are lower today at 2.160 million bags. The ICO daily average price is now 138.80 ct/lb. Brazil will get mostly dry conditions with near normal temperatures. Central America will get scattered showers. Vietnam will see scattered showers. ICE said that 22 contracts were posted for delivery today against NY July futures and that total deliveries for the month are now 434 contracts.
Chart Trends: Trends in New York are mixed to down with no objectives. Support is at 147.00, 146.00, and 143.00 September, and resistance is at 155.00, 158.00 and 160.00 September. Trends in London are mixed. Support is at 1660, 1620, and 1600 September, and resistance is at 1730, 1760, and 1790 September .
General Comments: New York and London were lower again as Brazil temperatures have moderated and the threat of Winterkill has passed. It was cold enough to damage Sugarcane crops in the central south of Brazil, but ideas are that most of the crop survived and is in good condition. Warmer temperatures are reported now. Mills were also processing for more Ethanol and less for Sugar than expected and this trend should continue with higher world petroleum prices. London has been the leader to the downside on ample supplies of White Sugar available to the market. There is plenty of White Sugar available in India for the market and monsoon rains are promoting good conditions for the next crop. Thailand is expecting improved production. Sugar demand is said to be weak. Ethanol demand is returning to the market as more world economies open up after the pandemic.
Overnight News: Brazil will get mostly dry conditions. Temperatures should average near to above normal. ICE said that 2,587 contracts were delivered against July futures.
Chart Trends: Trends in New York are mixed to down with objectives of 1710 and 1540 October. Support is at 1740, 1730, and 1700 October, and resistance is at 1790, 1820, and 1850 October. Trends in London are mixed to down with objectives of 453.00 and 438.00 October. Support is at 460.00, 450.00, and 445.00 October, and resistance is at 470.00, 477.00, and 482.00 October.
General Comments: New York and London closed a little lower on follow through selling. The daily charts still show down trends in New York and in London. Ports in West Africa are filled with Cocoa right now as demand remains lackluster. The weather has had above average rains in West Africa and crop conditions are rated good. European demand has been slow and demand ideas in general are weak. 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 lower today at 5.782 million bags. ICE said that 0 contracts were posted for July delivery and that total deliveries for the month are now 267 contracts.
Chart Trends: Trends in New York are down with objectives of 2220 September. Support is at 2270, 2240, and 2210 September, with resistance at 2340, 2370, and 2410 September. Trends in London are down with objectives of 1580 and 1550 September. Support is at 1620, 1640, and 1650 September, with resistance at 1640, 1650, and 1670 September.