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
Wheat: Wheat closed lower Friday but higher for the week in all three markets and prices are back in the recent trading range. Speculators appeared to be the best sellers and were reported to be liquidating longs on news that a new Covid variant has been discovered in Africa. European nations were also starting to lock down again as the virus resurges there. Demand ideas got hurt on Friday. Ideas have been that the US will have good demand for Wheat as the rest of the northern hemisphere is short production this year. Offer volumes are down from both Russia and Europe. Dry weather in southern Russia as well as the northern US Great Plains and Canadian Prairies caused a lot less production and are still supporting the market. The lack of production has reduced the offers and Russia plans to announce sales quotas for next year very soon. Russia has already increased export taxes to control the flow of export Wheat out of the country.
Weekly Chicago Soft Red Winter Wheat Futures
Weekly Chicago Hard Red Winter Wheat Futures
Weekly Minneapolis Hard Red Spring Wheat Futures
Corn: Corn closed higher and at new highs for the move despite widespread selling early in the day on Friday. Early selling was caused by Coronavirus fears as parts of Europe are locking down due to a resurgence of the virus and as a new variant was reported in Africa. The ability of Corn to recover losses and close higher was considered bullish and indicated the potential for strong demand in the market. The weekly charts still suggest higher prices are coming longer term and the fundamentals do as well. Corn has relatively tight supplies as farmers are mostly done harvesting and not selling. Demand will be an increasing feature in the trade moving forward as the harvest moves to completion sometime this month. Demand has been good so far this season. Yield reports have been mixed but generally strong. Most of the elevators along the Mississippi are exporting again which is good news for nearby demand. There are a lot of ideas that production and planted and harvested area will be significantly less next year due to the lack of fertilizers available and the cost of production. Oats were higher and held the recent trading range.
Weekly Corn Futures
Weekly Oats Futures
Soybeans and Soybean Meal: Soybeans and Soybean Oil closed lower on Friday and for the week primarily as Coronavirus fears returned to the market. Soybean Meal was also lower on Friday. Soybean Oil weakened due to weakness in Crude Oil futures and subsequent demand concerns due to the potential for closings to return due to a resurgence of the Coronavirus. Soybean Meal was weaker as demand has moderated in the US and Canada with no big amounts of Rapeseed or Canola Meal available. The demand got real strong but has since backed off. Harvest is starting to wrap up for Soybeans and a harvest low might have been hit this week. Reports indicate that farmers are limited sellers at best. Gulf port elevators are coming on line and export sales and exports are increasing. Planting and initial crop development is going very well in Brazil. Brazil could have soybeans ready for export by the end of February and the crop potential is up to 150 million tons. It has been dry in Argentina but rain has been falling this week and conditions for planting and initial growth are improving.
Weekly Chicago Soybeans Futures
Weekly Chicago Soybean Meal Futures
Rice: Rice was sharply lower on Friday and lower for the week on what appeared to be speculative selling. A return of the Coronavirus to Europe and the discovery of a new variant in Africa gave the market some big problems to work though and speculators apparently decided to reduce risk. Some producer selling was possible, but many producers are done harvesting and are hunting and not interested in selling at a time that is traditionally the cheapest prices of the year. The cash market is reported to be stronger. The crop has been largely harvested in all states. Export demand has been good but not great so far and is mostly for paddy. Mill demand has been about average so far.
Weekly Chicago Rice Futures
Palm Oil and Vegetable Oils: Palm Oil was lower in range trading last week on ideas of weak production ahead and good demand, especially from China for fuel uses. Futures are now at the lower end of the range. Reports of new lockdowns in Europe and a new variant of the Coronavirus discovered n Africa hurt demand ideas on Friday and caused speculative selling to reduce risk. Support still comes from ideas that supply and demand are in balance or supplies are short. There are ideas of tight supplies due to labor problems. There are just not enough workers in the fields due to Coronavirus restrictions. Production has also been down to more than offset the export losses so prices have trended higher. Canola was higher along with price action in Chicago Soybean Oil and closed higher on Friday despite the Coronavirus news and its potential effects on demand. Farmers are bullish and reluctant to sell because of the sharp reduction in Canola production in Canada this year. The weekly chart trends are up.
Weekly Malaysian Palm Oil Futures
Weekly Chicago Soybean Oil Futures
Weekly Canola Futures
Cotton: Cotton futures closed lower for the week on demand concerns. Demand has fallen off with the rally in the US Dollar but US prices are reported to be still well below those in China so strong demand is expected to continue, at least from that destination. News on Friday of lockdowns in Europe along with the discovery of a new variant in Africa hurt demand ideas and caused new selling. Trends are sideways on the charts but are starting to turn down on the weaker demand ideas. Analysts say the Asian demand is still very strong and likely hold at high levels for the future. US consumer demand has been very strong as well despite higher prices and inflation. Good US production is expected.
Weekly US Cotton Futures
Frozen Concentrated Orange Juice and Citrus: FCOJ was lower last week on speculative profit taking and trends are turning down in the market. Demand ideas were hurt here and around the world by the return of Covid induced lockdowns in Europe and the discovery of a new Covid variation in Africa. The hurricane season is over and the chances for a damaging storm to hit the state of Florida are gone so speculators have gotten out of longs and got short. The weather remains generally good for production around the world. Brazil has some rain with more in the forecast and flowering is likely. Brazil production was down last year due to dry conditions at flowering time and then a freeze just before harvest. Weather conditions in Florida are rated mostly good for the crops with a couple of showers and near normal temperatures. Mexican crop conditions in central and southern areas are called good with rains. Northern and western Mexico is rated in good condition.
Weekly FCOJ Futures
Coffee: New York and London closed higher last week with the logistical and production problems in Brazil very important to the trade. The lack of Coffee available to deliver against Robusta contracts remains a factor. Containers are not available in Vietnam to ship the Coffee. Covid has also returned to Vietnam and could be a factor in interrupting shipments. Brazil also has limited amounts of Coffee available after bad weather at flowering time and then a freeze before the harvest got underway. Production conditions for the next crop in Brazil are called good. Scattered showers are now in the forecast for Southeast Asia and for Vietnam. The weather has been erratic and some harvest delays are being reported due to too much rain falling before.
Weekly New York Arabica Coffee Futures
Weekly London Robusta Coffee Futures
Sugar: New York and London closed lower with some big selling seen Friday due to extreme weakness in Crude Oil futures. Crude Oil and Sugar were hit by weaker demand ideas caused by reports of new lockdowns in Europe as the Covid returns there and reports of a new variant discovered in Africa. The daily charts show that trends are turning down again. Reports indicate that consumer demand has returned to the market. Ideas are that the supplies are out there but it will take a stronger price to get them into the market. Ideas are that Indian producers and exporters are willing sellers above 20.50 cents. Processors in Brazil are refining the cane for Ethanol more than Sugar right now and this trend is expected to continue due to the relative price spreads. The reduced production potential from Brazil for the current harvest is still impacting the market as cane production suffered last season. India is not offering as world prices are well below domestic prices and has had some weather problems of its own.
Weekly New York World Raw Sugar Futures
Weekly London White Sugar Futures
Cocoa: New York closed lower and London closed lower on what appeared to be speculative long liquidation. Much of the selling came Friday on ideas of weaker demand caused by reports of new lockdowns in Europe due to Covid and reports of a new variant discovered in Africa. Ideas are that demand will only improve slightly if at all and production in West Africa appears to be good this year. Both Ivory Coast and Ghana are reporting improved weather as it is now mostly sunny with some scattered showers around.
Weekly New York Cocoa Futures
Weekly London Cocoa Futures
Questions? Ask Jack Scoville today at 312-264-4322