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
General Comments: Cotton was lower as the US stock markets worked lower and fears about demand returned. New crop months were down slightly as hot and dry conditions in the western Great Plains continue. It is also hot and dry in India and crops grown there are thought to be under stress as well. There are ideas that production potential is slipping further due to the hot and dry weather in West Texas and the rest of the western Great Plains. USDA estimated production for the coming year at 16.50 million bales and this was below trade expectations. USDA said that planted area was less than had been previously forecast due to the hot and dry weather in the western Great Plains. Chinese demand could become less due to the Covid lockdowns there be trimming imports due to Covid and has closed a number of cities as the Covid spreads through the nation. China has been buying even with the port closures and domestic difficulties caused by renewed Covid lockdowns.
Overnight News: The Delta will get mostly dry conditions and above normal temperatures and Southeast will get mostly dry conditions and above normal temperatures. Texas will have mostly dry conditions and above normal temperatures. The USDA average price is now 139.47 ct/lb. ICE said that certified stocks are now 1,088 bales, from 1,088 bales yesterday. USDA said that weekly net Upland Cotton export sales are 110,900 bales this year and 25,400 bales next year. Net Pima sales are 2,300 bales this year and 2,700 bales next year.
Chart Trends: Trends in Cotton are mixed to up with objectives of 153.20, 159.80, and 161.80 July. Support is at 142.10, 140.70, and 137.60 July, with resistance of 148.70, 152.90 and 155.90 July.
General Comments: FCOJ was lower yesterday on demand concerns as stock markets were sharply lower and trends are mixed on the daily charts. A freeze is possible in center south parts of Brazil and Oranges production could be affected later this week. USDA increased its Florida and US production estimates by about 2 million boxes to 40.2 million boxes last week. USDA had been cutting production in previous estimates. The market is short Oranges and short juice production but is also worried about domestic demand destruction as pills are becoming cheaper again. The greening disease has taken its toll on the US crop and the previous Brazil crop was down significantly due to drought. The weather remains generally good for production around the world for the next crop. Brazil has some rain and conditions are rated good, but it is drier now and some tree stress could develop soon. Weather conditions in Florida are rated mostly good for the crops with some showers and warm temperatures.
Overnight News: Florida should get isolated showers. Temperatures will average near to above normal. Brazil should get isolated showers and near normal temperatures. ICE said that 0 notices were posted for delivery against May futures and that total deliveries for the month are now 312 contracts.
Chart Trends: Trends in FCOJ are mixed. Support is at 166.00, 164.00, and 160.00 July, with resistance at 173.00, 179.00, and 182.00 July.
General Comments: New York and London closed lower on ideas that a Brazil freeze will not harm trees or fruit. London closed higher in sympathy with New York. It could freeze in at least Parana and crops could be damaged as much below normal temperatures are forecast for later this week. However, how cold and where is the question and ideas are that Coffee will escape with no damage. The Ukraine war is supporting ideas of less demand from Europe generally and Ukraine and Russia. Demand from China is thought to be less due to the war against Covid. Deliveries from Vietnam and Brazil Robusta are noted to be decreasing as the harvest is now complete, but selling was active in previous months.
Overnight News: ICE certified stocks are higher today at 1.111 million bags. The ICO daily average price is now 193.49 ct/lb. Brazil will get mostly dry conditions with below normal temperatures. Central America will get scattered showers. Vietnam will see scattered showers. ICE NY said that 0 delivery notices were tendered against May contracts and that total deliveries for the month are now 543 contracts.
Chart Trends: Trends in New York are mixed. Support is at 209.00, 205.00, and 202.00 July, and resistance is at 221.00, 224.00 and 229.00 July. Trends in London are mixed. Support is at 2040, 2010, and 1990 July, and resistance is at 2090, 2120, and 2130 July.
DJ Brazil Cuts 2022 Arabica Coffee Forecast to 35.7M Bags on Bad Weather
By Jeffrey T. Lewis
SAO PAULO–Brazilian crop agency Conab cut its forecast for the country’s production of arabica coffee, saying bad weather last year had a significant impact on productivity, while raising its forecast for production of the robusta variety.
The country’s farmers will produce a total of 53.4 million bags of coffee this year, down from its initial forecast of 55.7 million bags. That is an increase from the 47.7 million bags produced in 2021, but down from the 63.1 million bags in 2020.
Brazil’s coffee production works on a two-year cycle, with larger crops in even-numbered years then smaller crops in odd-numbered years as the plants “rest” and recover. Brazil is the world’s biggest producer and exporter of the more sought-after arabica variety of coffee, and the second-biggest producer of robusta coffee, after Vietnam. The arabica crop is much more affected by the two-year growth cycle than the robusta crop.
The South American country will grow 35.7 million bags of arabica coffee, compared with 31.4 million bags last year and 48.7 million bags in 2020, Conab said. In January, the agency forecast a crop of 38.8 million bags of arabica beans.
The robusta crop will reach 17.7 million bags, up from Conab’s initial forecast of 17 million bags. Brazil grew 16.3 million bags of robusta coffee in 2021 and 14.3 million bags in 2020, according to the agency.
Frost in July and August of last year, along with scant rain in Brazil’s biggest arabica-producing state, Minas Gerais, hurt the development of coffee plants, Conab said. Even with more plentiful precipitation beginning in October of last year, the plants weren’t able to recover enough to help boost production, according to the agency.
General Comments: New York and London closed a little lower yesterday in consolidation trading with freezing temperatures possible later this week in Brazil. Ideas are that prices for Sugar are relatively cheap in the world market. Sugarcane production could easily be affected in central-south areas. The price action implies renewed demand for White Sugar has appeared in the world market. Increased offers from India and Thailand are expected if the market rallies. Pakistan is also increasing its offers due to good crops there. All are primarily exporters of White Sugar while Brazil exports more Raw Sugar. Thailand expects to produce about 10 million tons of sugar this year, up 33% from last year. India said it could export more than 9.0 million tons of Sugar. Brazil mills are crushing for Ethanol at this time and not Sugar
Overnight News: Brazil will get mostly dry conditions. Temperatures should average nbelow normal. India will get isolated showers in eastern areas and near to above normal temperatures.
Chart Trends: Trends in New York are up with objectives of 2030 and 2100 July. Support is at 1980, 18940, and 1920 July and resistance is at 2020, 2040, and 2050 July. Trends in London are up with no objectives. Support is at 548.00, 542.00, and 536.00 August and resistance is at 560.00, 566.00, and 572.00 August.
General Comments: New York and London moved lower. The weather is good for harvest activities in West Africa. Current reports from Ivory Coast indicate that the weather is a good mix of sun and rain so a good midcrop production is expected. The weather is good in Southeast Asia. Ghana arrivals have been below year ago levels, but Ivory Coast arrivals are ahead of last year.
Overnight News: Scattered showers are forecast for West Africa. Temperatures will be near normal. Malaysia and Indonesia should see scattered 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 5.023 million bags.
Chart Trends: Trends in New York are mixed. Support is at 2460, 2410, and 2370 July, with resistance at 2530, 2570, and 2620 July. Trends in London are mixed. Support is at 1750, 1740, and 1720 July, with resistance at 1790, 1810, and 1820 July.