About The Author

Jack Scoville

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

COTTON
General Comments: Cotton was moderately higher 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 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 scattered showers and above normal temperatures. The Southeast will see scattered showers and above normal temperatures. Texas will have mostly dry conditions and above normal temperatures. The USDA average price is now 81.43 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 84.80, 86.10 and 88.00 March.

FCOJ
General Comments: FCOJ was a little lower again yesterday despite a late week rally last week based on smaller Florida production estimates from USDA. Trends are mixed as the market seems to be falling back into a trading range after making a spike high after the reports were released. 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.
Overnight News: Florida should get mostly dry conditions. Temperatures will average above normal. Brazil should get scattered showers and near normal temperatures.
Chart Trends: Trends in FCOJ are mixed. Support is at 205.00, 201.00, and 197.00 March, with resistance at 209.00, 214.00, and 217.00 March.

DJ Why Orange Juice Is So Expensive Right Now — WSJ
By Ryan Dezember and David Uberti
Florida orange growers are harvesting their smallest crop in nearly 90 years, the result of an ill-timed freeze, two hurricanes and citrus disease that is laying waste to its groves.
The Sunshine State is expected to produce just 18 million 90-pound boxes of oranges, the Agriculture Department said last week. That would be less than half the size of last year’s poor crop and a 93% decline from Florida’s peak output in 1998.
Worse still, the Agriculture Department said the fruit this year is small, which means more oranges are needed to fill each box and to squeeze for the same amount of juice.
The measly crop is a blow to an industry that has become synonymous with Florida, which will produce fewer oranges than California for the first time since World War II, when the concentrated juice business was born. Unfortunately for juice makers and drinkers, California oranges are mostly for eating.
Short supplies of Florida’s juice oranges have lifted frozen concentrate orange-juice futures to near records. Juice at the grocery store, increasingly made with fruit imported from Brazil and Mexico, has never cost more, which won’t help with the yearslong decline in consumption.
Frozen concentrate orange-juice futures were one of last year’s top-performing commodities, rising more than 40% to reach within pennies of the all-time high in December. Futures have remained at lofty levels, ending Tuesday at $2.062 a pound, about 20 cents shy of the record notched in 2016 when there were worries about the Brazilian crop.
Retail juice prices are sharply higher as well, said Judy Ganes, a Panama-based commodities and futures analyst. Not-from-concentrate juice is fetching more than $10 a gallon, while reconstituted juice recently hit a record $6.27 a gallon, she said. Those prices are up more than 20% since 2016, the last time futures climbed as high as they are now, and roughly double the cost 20 years ago.
“It’s like liquid gold,” Ms. Ganes said. “Prices are justified to be high, yet that also limits demand.”
High prices may push growers to invest in protecting trees from Asian citrus psyllids, the tiny invasive winged insects that spread citrus greening disease, and discourage them from turning to other crops, said Tanner Ehmke, an economist at agriculture-focused CoBank. Still, prospects for the Florida orange aren’t bright, he said.
“The long-term trend will be for production to continue declining because of citrus greening,” he said.
European explorers brought oranges to Florida. Juan Ponce de León, Hernando de Soto and the like arrived carrying seeds and citrus trees were blooming around St. Augustine by the late 16th century.
During World War II, Agriculture Department scientists figured out how to evaporate water from orange juice to make a concentrate that could be distributed to soldiers. Orange juice was suddenly available to the masses cheaply and year-round. Florida growers organized themselves and orange juice became an expected part of the American breakfast.
In its late 1970s heyday, there were more than 50 processing plants in Florida. The area dedicated to orange groves peaked at more than 665 million acres in the late 1990s.
Suburban sprawl took a toll. Citrus greening, spread by the breeze-borne psyllid, arrived a few years later and expanded during a string of hurricanes in 2004.
Greening is transmitted when the psyllids suck sap from trees. The incurable bacterial disease starts in the leaves and works its way through the tree like a hardening of the arteries, blocking nutrients and water. Oranges drop from branches unripe and unusable.
Researchers have struggled to find remedies. Farmers switched to alternative crops like peaches, hops and pineapples. Meanwhile, consumption has waned as Americans have come to view sugary drinks differently. The number of Florida acres with orange trees has fallen by nearly half since the late 1990s, leaving less margin for frosts and storms like those that ruined crops in 2022.
A freeze last January damaged budding trees. In September, Hurricane Ian, a deadly Category 4 storm, made landfall near Fort Myers, Fla., and ripped across the middle of the state, flinging fruit from branches and uprooting trees. In November, Hurricane Nicole hit Florida’s Atlantic Coast and barreled north up the peninsula.

COFFEE
General Comments: New York and London were both lower as Brazil offers increased and those from Vietnam increased as well as the Tet holiday is coming close. 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 this week as they ty to get sales on the books before the Tet holiday. 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. Brazil shipped 35.57 million bags of Coffee in 2922, down about 2.6% from 2021.
Overnight News: ICE certified stocks are slightly lower today at 0.850 million bags. GCA stocks are now 6.377 million bags, from 6.390 million last month. The ICO daily average price is now 153.42 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 mixed to down with objectives of 141.00 and 138.00 March. Support is at 142.00, 140.00, and 137.00 March, and resistance is at 154.00, 159.00 and 163.00 March. Trends in London are mixed to up with objectives of 1950 and 2040 March. Support is at 1880, 1850, and 1780 March, and resistance is at 1920, 1950, and 1970 March.

SUGAR
General Comments: New York and London closed higher again yesterday. Higher Crude Oil futures provided some support. 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. Ideas are that India will produce about 34.3 million tons of Sugar this year, about 4% less than the previous outlook. The weather in Brazil remains good for the next crop. World Sugar is expected to be in a big surplus production next year.
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 2010, 2030, and 2050 March. Trends in London are mixed. Support is at 535.00, 527.00, and 522.00 March and resistance is at 557.00, 559.00, and 565.00 March.

COCOA
General Comments: New York and London closed higher yesterday in part on talk that hot and dry conditions reported in Ivory Coast could curtail mid crop production. The fourth quarter grind data will be released on Thursday and will offer a look at demand. There are still reports of dry weather in West Africa that could hurt production potential. Good production is reported for the main crop 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 much higher today at 5.528 mi0lion bags.
Chart Trends: Trends in New York are mixed to up with objectives of 2700, 2750, and 2860 March. Support is at 2590, 2570, and 2540 March, with resistance at 2670, 2700, and 2730 March. Trends in London are mixed. Support is at 2040, 2020, and 2000 March, with resistance at 2090, 2120, and 2160 March.

DJ Asian Cocoa Grindings Fell 0.2% in Fourth Quarter
By Yi Wei Wong
Asian cocoa-bean grindings fell 0.2% in the fourth quarter, according to figures released Wednesday by the Cocoa Association of Asia.
Cocoa grindings for the quarter totaled 230,806 metric tons, compared with 231,309 tons a year earlier, the figures showed. On a quarterly basis, cocoa grindings slipped 0.1% from the previous quarter.
For 2022, cocoa grindings rose 3.1% to 904,094 tons, the association said.
“This quarter’s grind stands amongst the strongest grind performances by CAA members in history and nicely caps off an historic year in terms of total grind with the 900,000 metric ton plateau being broken for the first time,” the association said.
Cocoa grindings–the volume of cocoa beans processed into the butters and powders used to make chocolate–are often taken as a proxy for cocoa demand.
The CAA is a trade association that groups the major companies involved in cocoa bean trade and processing, warehousing and related logistical activities in the region.

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