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 Rise to Fresh High, Adding to Inflation Worries
By Will Horner
Global food prices rose to their highest level in a decade in September as supply of staple foods tightened while demand remained strong, the United Nations Food and Agriculture Organization said Thursday.
The FAO’s Food Price Index rose 1.2% to 130 points from the previous month to its highest level since late 2011. The index is up over 32% from its level a year ago.
Global food prices have been supercharged by a combination of post-Covid-19 supply challenges and extreme weather events which have harmed crops. Those issues have come just as demand has rebounded as economies have reopened, pushing prices higher and adding to concerns about inflation.
The increases were largest for cereal prices, which rose 2% on month, while vegetable oil prices rose 1.7% and dairy prices added 1.5%. Sugar prices rose a more modest 0.5% and meat prices were little changed.
General Comments: Futures were sharply higher to limit up in early trading yesterday but then closed with solid gains but well below limit up as the strong rally continued on ideas of strong demand and questions about supply. The US and China are talking again and the US is pressing China to complete its Phase One trade deal agreements. Demand or US Cotton remains very strong and that is good news for sellers as the strong demand implies strong prices should continue. The demand is expected to be strong from Asian countries as world economies recover from Covid lockdowns. Analysts say the demand is still very strong and likely to hold at high levels for the future. Good US production is expected, but there are some questions about the overall production in Texas. There are ideas of less production from India due to recent adverse weather in Cotton areas there. Chinese Cotton areas have had too much rain as well, and Chinese demand is also strong as clothes makers use foreign Cotton to get away from domestic supplies that might have been produced by forced labor and might not be allowed in the US or other western countries
Overnight News: The Delta will get mostly dry conditions or isolated showers and temperatures trending to above normal. The Southeast should see isolated to scattered showers and near to above normal temperatures. Texas will have mostly dry conditions or isolated showers and above normal temperatures. The USDA average price is now 107.85 ct/lb. ICE said that certified stocks are now 37,929 bales, from 37,929 bales yesterday. ICE said that 0 notices were posted for delivery against October contracts and that total deliveries for the month are now 115 contracts. USDA said that net weekly Upland Cotton export sales were 246,700 nbales this year and 55,000 bales next year. Net Pima sales were 13,700 bales this year and 0 bales next year.
Chart Trends: Trends in Cotton are up with no objectives. Support is at 10920, 10680, and 10360 December, with resistance of 11400, 11520 and 11640 December.
General Comments: FCOJ closed mixed yesterday and prices remain near the lows of the current trading range. Chart trends are mixed as the weather remains generally good for production around the world but the trends are trying to turn down. Brazil has some rain is in the forecast and flowering will be possible in the next couple of weeks. Weather conditions in Florida are rated mostly good for the crops with scattered showers and near normal temperatures. Mexican crop conditions in central and southern areas are called good with rains, but earlier dry weather might have hurt production. Northeastern Mexico areas were too dry but have gotten good rains in recent weeks, and the rest of northern and western Mexico is rated in good condition. Florida is in the middle of the hurricane season but the storms have missed the state so far and crop conditions are good.
Overnight News: Florida should get dry conditions or isolated showers. Temperatures will average near normal. Brazil should get scattered to isolated showers and above normal temperatures.
Chart Trends: Trends in FCOJ are mixed. Support is at 130.00, 128.00, and 125.00 November, with resistance at 134.00, 137.00, and 142.00 November.
General Comments: New York and London closed higher despite forecasts for better rains for Brazil Coffee areas. It was a consolidation day after the big move lower during the previous session. The rains will be spotty but just about all areas will get some rain and some areas will get enough rain over the next week or two to promote flowering. New York has found support from the lack of Coffee available in Brazil after extreme weather events. It has been dry in Brazil and there has been a big freeze there. London is having trouble sourcing Coffee from Vietnam due to a shortage of containers to carry the Coffee out of the country and as the country suffers from a resurgence of the Covid epidemic. Scattered showers are now in the forecast for Southeast Asia and big rains are possible in Vietnam from a tropical system. Good conditions are reported in northern South America with above average rains and good conditions reported in Central America with near average rains. Conditions are reported to be generally good in parts of Africa.
Overnight News: ICE certified stocks are lower today at 1.973 million bags. The ICO daily average price is now 174.97 ct/lb. Brazil will get scattered to 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. Support is at 190.00, 188.00, and 185.00 December, and resistance is at 200.00, 207.00 and 212.00 December. Trends in London are mixed. Support is at 2100, 2060, and 2020 November, and resistance is at 2140, 2180, and 2210 November.
General Comments: New York and London were both a little lower yesterday but London December closed slightly higher. Trends are still trying to turn up again on the daily and weekly charts. Ideas are that the supplies available to the cash market are rather slim and that demand is increasing for both White and Raw Sugar. The reduced production potential from Brazil is still impacting the market. India is not offering as world prices are well below domestic prices and has had some weather problems of its own. Consumption of Sugar is said to be improving from previous low levels. Thailand is expecting improved production. It is raining in southern Brazil which will be good for the next crops there but the tight situation now must still be dealt with.
Overnight News: Brazil will get scattered showers. Temperatures should average above normal.
Chart Trends: Trends in New York are mixed. Support is at 1950, 1930, and 1920 March, and resistance is at 2010, 2040, and 2090 March. Trends in London are mixed. Support is at 500.00, 496.00, and 485.00 December, and resistance is at 516.00, 520.00, and 526.00 December.
General Comments: New York and London closed lower as profit taking hit the pits. Ideas of short West African production for the coming year are still providing the best support. There are increasing concerns that Ghana will have less production this year and it has been raining in Ivory Coast to promote the return of disease to the pods. Ghana is the worlds second largest producer behind Ivory Coast so reduced production in both countries could mean short supplies for the world market this year. World economies are starting to reopen after Covid and the open economies are giving demand the boost. Cocoa production in Ivory Coast is expected to drop by up to 11% in the 2021/2022 season that starts on Oct. 1 from the previous year. Ivory Coast arrivals are now 2.193 million tons, up 5.6% from last year.
Overnight News: Isolated to scattered showers are forecast for West Africa. Temperatures will be 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 higher today at 5.451 million bags.
Chart Trends: Trends in New York are up with no objectives. Support is at 2720, 2690, and 2660 December, with resistance at 2800, 2830, and 2860 December. Trends in London are up with no objectives. Support is at 1870, 1840, and 1820 December, with resistance at 1930, 1960, and 1990 December.
DJ Buyers Report Poor 2021-22 Main Cocoa Harvest in Nigeria’s Oyo and Edo States
By Obafemi Oredein
Special to Dow Jones Newswires
IBADAN, Nigeria–The main cocoa harvest for the 2021-22 season has been poor in Nigeria’s Oyo and Edo states due to excessive rainfall and the outbreak of disease, buyers said Thursday.
Rainfall, especially in August and September, led to the onset of the black pod disease on cocoa farms, and several farmers couldn’t afford to buy enough fungicides to combat the disease, said Kola Adekunle, a cocoa farmer in the Oyo state capital Ibadan.
The cost of imported fungicides rose by around 40% on year due to a fall in the local currency, the naira, against the U.S. dollar, according to Mr. Adekunle. Prices are still rising, he said.
“My main cocoa harvest now is three 60kg bags, this is lower than the five 60kg bags I harvested in the same period of last season,” Mr. Adekunle said.
Too much rain and the onset of disease has also dampened cocoa production in Edo, said Vincent Ohwojakpor, a trader.
“Farmers hope main cocoa production will improve in November in Oyo state when the dry season would commence fully in the southwest,” said Akin Omotayo, manager at the Ibadan Cooperative Produce Marketing Union.
The main crop harvest usually runs from September or October until January or February in the southwest and the midwest regions, a trader said.
The rainy season begins in May and usually ends in October, while the dry season begins in November until April when cocoa farmers have enough sunshine to dry their beans properly, he said.