Softs Report 01/13/2023

COTTON       

General Comments:  Cotton was lower again yesterday and remains firmly inside the trading range created over the last couple of months.  The USDA reports were considered bearish as USDA increased domestic production estimates and cut US and world demand to increase ending stocks for both.  US ending stocks were estimated at 4.20 million bales, from 3.5 million last month.  World ending stocks were estimated at 89.93 million bales, from 89.56 million last month.   Ideas of weak demand continue to be heard and the weekly export sales report was poor once again.  Futures have been stuck in the same trading range since the beginning of November but are showing signs of wanting to work higher despite bad demand fundamentals.  Overall, the demand for US Cotton has not been strong.  Some ideas that demand could soon increase as China could start to open its economy in the next couple of months were hurt by news of Covid outbreaks in China.  Covid is now widespread in China so the beneficial economic effects of the opening are being delayed but these effects should start to be felt as the people there achieve immunity over the next few weeks.

Overnight News:  The Delta will get mostly dry conditions and near to below normal temperatures.  The Southeast will see mostly dry conditions and near normal temperatures.  Texas will have mostly dry conditions and above normal temperatures.  The USDA average price is now 82.87 ct/lb.  ICE said that certified stocks are now 8,900 bales, from 8,900 bales yesterday.

Chart Trends:  Trends in Cotton are mixed.  Support is at 80.50, 79.80, and 78.80 March, with resistance of 84.70, 86.10 and 88.00 March.

  U.S. Cotton Supply and Use  1/ 

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2020/21   2021/22 Est.  2022/23 Proj.  2022/23 Proj.

Item                                                          Dec            Jan

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Million Acres

Planted                     12.09          11.22          13.79          13.76

Harvested                    8.22          10.27           7.88           7.44

Pounds

Yield per Harvested

Acre                         853            819            868            947

Million 480 Pound Bales

Beginning Stocks               7.25           3.15           3.75           3.75

Production                    14.61          17.52          14.24          14.68

Imports                        0.00           0.01           0.01           0.01

Supply, Total               21.86          20.68          18.00          18.44

Domestic Use                   2.40           2.55           2.20           2.20

Exports, Total                16.35          14.62          12.25          12.00

Use, Total                  18.75          17.17          14.45          14.20

Unaccounted 2/                -0.04          -0.24           0.05           0.04

Ending Stocks                  3.15           3.75           3.50           4.20

Avg. Farm Price 3/             66.3           91.4           85.0           83.0

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WASDE – 632 – 18                    January 2023

 

World Cotton Supply and Use  1/ 

(Million 480-Pound Bales)

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Supply                Use

Region                 Beginning Produc-                            Loss  Ending

Stocks    tion Imports Domestic Exports    2/   Stocks

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2022/23 Proj.

World

Dec   85.44  115.73   42.27  111.70   42.25   -0.07   89.56

Jan   85.34  115.40   41.63  110.85   41.66   -0.08   89.93

World Less China

Dec   48.13   87.73   34.27   76.20   42.13   -0.07   51.87

Jan   48.03   87.40   33.88   75.35   41.53   -0.08   52.49

United States

Dec    3.75   14.24    0.01    2.20   12.25    0.05    3.50

Jan    3.75   14.68    0.01    2.20   12.00    0.04    4.20

Total Foreign

Dec   81.69  101.49   42.27  109.50   30.00   -0.12   86.06

Jan   81.59  100.72   41.62  108.65   29.66   -0.12   85.73

Major Exporters  4/

Dec   32.21   58.49    2.40   31.66   25.86   -0.17   35.75

Jan   32.11   57.74    2.45   31.16   25.54   -0.17   35.78

Major Importers  8/

Dec   46.75   39.74   37.60   73.75    2.87    0.06   47.41

Jan   46.75   39.74   36.90   73.41    2.87    0.06   47.06

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WASDE – 632 – 28                    January 2023

 

FCOJ 

General Comments:  FCOJ was a little lower yesterday in consolidation trading.  Trends are still trying to turn up again on the daily charts.  Demand should start to improve now with the holidays now over.  USDA estimated Florida Oranges production at just 18 million boxes, from 20 million in its previous estimate.  US production was estimated at 2.7 million tons, down 22% from last month..  The supply situation in the US and in the world market looks very tight.  Historically low estimates of production due in part to the hurricanes and in part to the greening disease has hurt production remain in place but are apparently part of the price structure now.  The weather remains generally good for production around the world for the next crop but not for production areas in Florida that have been impacted in a big way by the two storms.  Brazil has some rain and conditions are rated good.  Mostly dry conditions are in the forecast for the coming days.  The Florida Movement and Pack report showed that inventories are 40% less than last year.

Overnight News:  Florida should get mostly dry conditions.  Temperatures will average near to above normal.   Brazil should get scattered showers and near normal temperatures.  ICE NY said that 0 notices were posted for delivery against January contracts and that total deliveries for the month are now 0 contracts.

Chart Trends:  Trends in FCOJ are mixed to up with objectives of 212.00 and 220.00 March.  Support is at 204.00, 201.00, and 197.00 March, with resistance at 209.00, 214.00, and 217.00 March.

 

Orange Production Down 5 Percent from December Forecast 

The United States all orange forecast for the 2022-2023 season is

2.70 million tons, down 5 percent from the previous forecast and down 22

percent from the 2021- 2022 final utilization. The Florida all orange

forecast, at 18.0 million boxes (810,000 tons), is down 10 percent from the

previous forecast and down 56 percent from last season’s final utilization.

In Florida, early, midseason, and Navel varieties are forecast at 7.00

million boxes (315,000 tons), unchanged from the previous forecast but

down 62 percent from last season’s final utilization. The Florida Valencia

orange forecast, at 11.0 million boxes (495,000 tons), is down 15 percent

from the previous forecast and down 52 percent from last season’s final

utilization.

The California all orange forecast is 46.1 million boxes (1.84 million tons),

is down 2 percent from previous forecast but up 14 percent from last season’s

final utilization. The California Navel orange forecast is 38.0 million boxes

(1.52 million tons), unchanged from the previous forecast but up 19 percent

from last season’s final utilization. The California Valencia orange forecast

is 8.10 million boxes (324,000 tons), down 11 percent from the previous

forecast and down 6 percent from last season’s final utilization. The Texas

all orange forecast, at 1.15 million boxes (49,000 tons) unchanged from the

previous forecast but up significantly from last season’s final utilization.

This report was approved on January 12, 2023.

 

DJ Retail Orange Juice Sales Get Less of a Boost From Covid-19 — Market Talk 

0923 ET – The Covid-19 boost for orange-juice sales is starting to lose its power. US stores sold 35.17M gallons of orange juice in the four weeks ended Dec. 31, the highest level since January 2022, according to Nielsen data provided by the Florida Department of Citrus. But that’s still down 7.2% from 2021 and down 5.9% from the comparable period of 2020. Retail prices once again surged to a new all-time high of $8.52 a gallon. (mary.dewet@dowjones.com)

 

COFFEE                                                                       

General Comments:  New York and London closed higher yesterday in recovery trading and as the fund selling dried up.  Ideas of big production for Brazil continue due primarily to rains falling in Coffee production areas now and as offers stayed strong from Brazil and increasingly from Vietnam.  Vietnamese sellers should remain more active in the next couple of weeks as they ty to get sales on the books before the Tet holiday.  Buying interest is also reduced, but ideas are that the buy side needs Coffee now.  There are ideas that production potential for Brazil had been overrated and reports of too much rain in Vietnam affected the harvest progress.  The weather in Brazil is currently very good for production potential but worse conditions seen earlier in the growing cycle hurt the overall production prospects as did bad weather last year.  Ideas are that the market will have more than enough Coffee either way when the next harvest comes in a few months.  Vietnam exported 187,077 tons of Coffee last month, up 53% from the previous month.   Vietnamese 2022 exports were 13.8% higher than in 2021.

Overnight News:  ICE certified stocks are lower today at 0.845 million bags.  The ICO daily average price is now 150.32 ct/lb.  Brazil will get isolated showers in northern areas with near normal temperatures.  Central America will get scattered showers.  Vietnam will see scattered showers.

Chart Trends:  Trends in New York are down with objectives of 141.00 and 138.00 March.  Support is at 140.00, 137.00, and 134.00 March, and resistance is at 154.00, 159.00 and 163.00 March.  Trends in London are mixed.   Support is at 1790, 1780, and 1770 March, and resistance is at 1890, 1910, and 1950 March.

 

SUGAR                                                                                                                 

General Comments:  New York closed higher and London closed mixed yesterday.  Reports indicate that the fund selling seen in recent days has dried up, allowing a recovery rally to develop.  Ideas are that mills in Brazil will be encouraged to produce more Sugar than Ethanol due to policy changes proposed by the Lula administration.  These ideas were enhanced by news that Brazil president Lula has frozen fuel taxes at current levels, giving Ethanol producers a reason to switch to Sugar as Ethanol profit margins could be squeezed by the tax moves.  The harvest has been delayed in Thailand.  Australia and Central America harvests are also delayed.  There is talk that production in India will be reduced this year after some bad weather and reduced yields reported in Maharashtra.  The weather in Brazil remains good for the next crop but bad for harvest and loading at ports as it is still raining in production areas.  World Sugar is expected to be in a big surplus production next year.  Unica said yesterday that Brazil mills crushed 2.6 million tons of Sugarcane in the last two week period, from just 8,500 tons in the same period last year.  The mills produced 165,000 tons of Sugar and 322.2 million liters of Ethanol.

Overnight News:  Brazil will get scattered showers.  Temperatures should average near normal.  India will get mostly dry conditions and near to above normal temperatures.

Chart Trends:  Trends in New York are mixed.  Support is at 1930, 1890, and 1850 March and resistance is at 1980, 2010, and 2030 March.  Trends in London are mixed.  Support is at 535.00, 527.00, and 522.00 March and resistance is at 551.00, 556.00, and 559.00 March.

 

  U.S. Sugar Supply and Use  1/ 

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2020/21  2021/22 Est. 2022/23 Proj. 2022/23 Proj.

Item                                                           Dec           Jan

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1000 Short Tons, Raw Value

Beginning Stocks                  1618          1705          1814          1819

Production 2/                     9233          9156          9039          9248

Beet Sugar                      5092          5155          4927          5048

Cane Sugar                      4141          4000          4111          4199

Florida                       2090          1933          1989          1989

Louisiana                     1918          1944          2025          2113

Texas                          134           124            97            97

Imports                           3221          3646          3494          3458

TRQ 3/                          1749          1579          1691          1606

Other Program 4/                 292           298           250           250

Non-program                     1180          1769          1552          1602

Mexico                         968          1379          1477          1477

High-tier tariff/other           212           390            75           125

Total Supply               14072         14506         14347         14525

Exports                             49            29            35            35

Deliveries                       12277         12578         12605         12605

Food                           12161         12470         12500         12500

Other 5/                         116           107           105           105

Miscellaneous                       40            81             0             0

Total Use                  12367         12688         12640         12640

Ending Stocks                     1705          1819          1707          1885

Stocks to Use Ratio               13.8          14.3          13.5          14.9

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Mexico Sugar Supply and Use and High Fructose Corn Syrup Consumption 1/

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Supply                Use

Fiscal                  Beginning  Produc-  Imports Domestic  Exports   Ending

Year                      Stocks     tion               2/             Stocks

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1000 Metric Tons, Actual Weight

Sugar

2021/22 Est.

Dec                          1053     6185       31     4629     1676      964

Jan                          1053     6185       31     4629     1676      964

2022/23 Proj.

Dec                           964     5900       35     4662     1266      971

Jan                           964     5900       35     4661     1267      971

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WASDE – 632 – 17                    January 2023

 

COCOA 

General Comments:  New York and London closed mostly higher yesterday on follow through buying.  There are still reports of dry weather in West Africa that could hurt production potential.   Ivory Coast arrivals appear to have improved lately with the recent rally in futures prices.  Ivory coast arrivals are now 1.172 million tons, up 14% from last year.  The Ivory Coast Cocoa grind is now 113,803 tons, up 6.9% from last year.  Good production is reported and traders are worried about the world economy moving forward and how that could affect demand.  Supplies of Cocoa are as large as they will be now for the rest of the marketing year.  Reports of scattered showers along with very good soil moisture from showers keep big production ideas alive in Ivory Coast.  Nigeria is reporting that Harmattan winds have arrived, but no significant effects are reported for now.  The weather is good in Southeast Asia.

Overnight News:  Mostly dry conditions are forecast for West Africa.  Temperatures will be near normal.  Malaysia and Indonesia should see scattered showers.  Temperatures should average near normal.  Brazil will get scattered showers and near normal temperatures.  ICE certified stocks are higher today at 5.101 mi0lion bags.

Chart Trends:  Trends in New York are mixed.  Support is at 2590, 2570, and 2540 March, with resistance at 2670, 2700, and 2730 March.  Trends in London are mixed.  Support is at 2020, 2000, and 1980 March, with resistance at 2090, 2120, and 2160 March.

Questions? Ask Jack Scoville today at 312-264-4322