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 markets traded lower last week as the war between Ukraine and Russia continued. Trends are sideways to down on the daily charts and down on the weekly charts for the Winter Wheat markets and sideways for the Minneapolis market for Spring Wheat due to less than expected planted area projections from farmers. Russia announced it was pulling back from Kiev and other cities in Ukraine but has failed to do so. Russia instead appears to be deploying its army near the major cities but in new locations. Ukraine has said it is willing to offer some concessions to Russia in return for peace, but what Russia will accept is still not known. Ports are closed in Ukraine and Russian shippers and exporters are not offering in part due to sanctions but mostly due to the war and the chance to lose ships. Ukraine can rail the exports to the EU for shipment but the amount that can be moved is very limited. The USDA prospective plantings report was considered bullish for Spring Wheat with farmers indicating they would plant on just 11.2 million acres, and the stocks report was mildly bullish to Wheat with stocks at 1.025 billion bushels. The weekly export sales report was poor.
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 last week and futures remain at the top end of the recent trading range as the market deals with less due to the war in Ukraine and the planting intentions of US farmers for the coming growing season. Conab estimated Brazilian Corn production at 115.6 million tons, from 112.3 million in March. USDA released its latest WASDE estimates and left the domestic supply and demand estimates unchanged. It raised world ending stocks estimates.. New crop months were higher on the much reduced planted area ideas from farmers but nearby months were firmer on the war and increased nearby demand from China and others. Russia has pulled back from Ukrainian cities and many atrocities left by the army are being reported.. The potential loss of Ukraine exports of Corn makes the world situation tighter and could be enough to keep Corn prices trending higher for now, but prices remain in a sideways range. The ports remain closed and Ukraine can rail out to the EU in limited amounts. Russia is also a Corn exporter and no product is moving from either country at this time China has a Covid outbreak again and has closed some cities and some ports in response. The moves are harsh but China has a no tolerance policy about the pandemic. The closings of cities and ports will hurt the economy as people can’t make or spend money and hurt imports as there will be fewer places to unload cargoes.
Weekly Corn Futures
Weekly Oats Futures
Soybeans and Soybean Meal: Soybeans and the products were higher last week after CONAB in Brazil estimated Soybeans production at 122.4 million tons, from 122.8 million in March. USDA increased export demand by 25 million tons and cut US ending stocks estimates, but not as much as the trade had expected. There is increasing concern in the US about the cold and wet Midwest weather keeping farmers from the fields for planting. It should turn briefly warm early this week but then will turn colder again. Russia pulled its army back from Ukrainian cities and left a trail of atrocities in its wake. More sanctions are now threatened for Russia due to what the world is seeing in Ukraine right now. There are still worries about Chinese demand because of Covid lockdowns there. Supplies available to the export market from South America remain limited. Both Ukraine and Russia are major exporters of Sunoil and control about 80% of the market combined but no Sunoil is moving from either country these days. China has been a major buyer of US Soybeans this year after a very slow start due to the problems in South America. They are buying for this year and already have booked a large amount of new crop Soybeans to cover future needs. Ideas are that the Chinese economy could slow down due to the Covid lockdowns there and cause the country to purchase less Soybeans in the world market. Shanghai has said it will remain open but asked office workers to work from home in a hybrid format. The world situation is still tightening as Brazil and Argentina harvested less Soybeans.
Weekly Chicago Soybeans Futures
Weekly Chicago Soybean Meal Futures
Rice: Rice was mixed on Friday and lower for the week on weaker export sales of only just over 8,000 tons. Nearby months were weaker than deferred months. USDA increased domestic demand for long grain Rice and cut long grain ending stocks estimates. Medium and short grain ending stocks levels were increased so overall Rice ending stocks were unchanged. Russia has pulled its troops back from Ukrainian cites to eastern areas it already controls and has left a string of atrocities in the wake of the withdrawal. Trends are still sideways on the daily charts. The cash market is showing that domestic mill business is around everywhere in lighter volumes. Producer sales are reported to have been way ahead of average early in the marketing year so stocks on hand in first hands are reported to be lower than normal. Growing conditions are considered good for crops right now although it has been a little cold. Planting and emergence is happening now.
Weekly Chicago Rice Futures
Palm Oil and Vegetable Oils: Palm Oil was higher last week in sympathy with the rallies in Chicago Soybean Oil. A new Covid outbreak is reported in China and cities and infrastructure has been shut down, including some airports and water ports. The economy could slow down and affect demand. Demand in Malaysia could improve soon as Indonesia is expected to keep most Palm Oil at home. However, production from Malaysia is expected to increase as well as the Covid lockdowns finally go away and as the weather is good for production. Indonesia is once again making moves to cut the availability of Palm Oil for export as it manages high internal prices. Canola was higher on the CONAB Brazil Soybeans estimate and in response to the dry conditions in Canada It is reported to be very dry and has been cold for planting. There are ideas of reduced Sunflower export potential from Russia and Ukraine. The market is worried about South American production as well. Canada produced a very short crop of Canola last year so supplies are tight. Futures prices are still in a trading range.
Weekly Malaysian Palm Oil Futures
Weekly Chicago Soybean Oil Futures
Weekly Canola Futures
Cotton: Cotton was lower last week on weaker export sales. The US sold less than 130 million bales of Cotton for this and the next crop year combined. USDA made no changes to the US ending stocks estimates or to the supply or demand side of the ledger. It did increase world production and ending stocks levels so the report had a bearish component. Nearby months were lower on the news and the bad export sales, but new crop found support as it is currently veery dry again in the western Great Plains. Production i=of the next crop is at risk now. There was talk about less demand for the market in part from Fed moves to control the inflation now seen in the US and around the world. Traders are getting worried about a potential recession caused by Fed tightening. China has been buying even with the port closures and domestic difficulties caused by renewed Covid lockdowns. Traders are worried about Chinese demand moving forward. China has closed two ports for imports due to Covid and is also closing down a number of cities as the Covid spreads through the nation. Shanghai has asked office workers to follow a hybrid model used here in the US and is closing financial markets.
Weekly US Cotton Futures
Frozen Concentrated Orange Juice and Citrus: FCOJ was higher last week on what was called speculative buying. Trends are up on the daily and weekly charts with the daily charts showing that new contract highs were made. The weather remains generally good for production around the world. Brazil has some rain and conditions are rated very good. Weather conditions in Florida are rated mostly good for the crops with some showers and warm temperatures. Florida Mutual said that FCOJ inventories are now 32% less than last year. Nielsen said that Orange Juice prices moved higher last month although lower volumes were sold. USDA noted higher oranges production than last month, but still less than last year for the US at 3.79 million tons, but Florida production is down from last month and last year at 1.72 million tons.
Weekly FCOJ Futures
Coffee: New York was higher as deliveries from Brazil remain less than needed by the market but London was lower on ideas of less demand from Ukraine, Russia, and China and as deliveries from Vietnam and Brazil Robusta are noted to be increasing. Selling has come from news that the Brazilian logistical problems are working themselves out and that deliveries are able to expand. The war is causing ideas of less Russian and Uranian demand and the return of Covid has the potential to really hurt Chinese demand as cities and ports have shut down there. Less deliveries are reported from Vietnam now as producers have sold most of the crop and are holding the rest and waiting for higher prices. Good growing conditions for the next crop in Brazil are still around but flowering is reported to be uneven this year in at least some areas. Vietnam exported 581,693 tons of coffee in the first quarter, up 28.3% from the same period a year earlier. IBGE said that Brazil’s coffee production this year is seen at 56.1 million 60-kg bags, up 0.9% from a previous projection.
Weekly New York Arabica Coffee Futures
Weekly London Robusta Coffee Futures
Sugar: Both markets were higher last week and continue to follow world petroleum prices as much as anything. The US government has proposed to open the reserve in an effort to lower petroleum prices here and this affected Sugar due to the potential for reduced ethanol demand from the lower prices. Russia has left a trail of atrocities in its withdrawal from Kiev and other cities in Ukraine. News reports indicate that little export activity is taking place from Ukraine with the ports basically closed. Russia said it is still exporting from Black Sea ports. India has signed contracts to export 7.2 million tons of White Sugar so far this year. The government there is contemplating a cap of 8.0 million tons this year but industry has said production could be up to 9.0 million. India and Thailand expect improved crops this year. Thailand expects to produce about10 million tons of sugar this year, up 33% from last year. Brazil could also have better Sugarcane production this year but the strengthening Real implies that most of the refining will be for Ethanol and not Sugar.
Weekly New York World Raw Sugar Futures
Weekly London White Sugar Futures
Cocoa: New York and London were higher again last week. Daily and weekly chart trends are still mixed in New York but are turning up in London. The weather is good for harvest activities in West Africa but some are concerned about dry weather that could affect the yields for the midcrop harvest. Some showers are in the forecast for West Africa and have been for several weeks, but the precipitation was less than normal last week. Farmers there say that soil moisture conditions are good for the midcrop, but there are concerns that conditions are too dry overall for the best yields. Demand fears remain as Europe is the leading per capita consumer of Chocolate and demand could drop if the war in Ukraine expands or even if it doesn’t. Demand fears have eased as the rest of Europe is not harmed yet. The weather is good in Southeast Asia. Ghana arrivals have been below year ago levels but Ivory Coast arrivals are ahead of last year. Ghana cocoa arrivals since October 1 are 524,000 tons by March 31, down 34% from 791,000 tons in the same period in the previous season.
Weekly New York Cocoa Futures
Weekly London Cocoa Futures
Questions? Ask Jack Scoville today at 312-264-4322