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 moderately higher again yesterday and still 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. 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 mostly dry conditions and above normal temperatures. The Southeast will see scattered showers and above normal temperatures. Texas will have mostly dry conditions and near to below normal temperatures. The USDA average price is now 83.42 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 81.570, 80.50, and 79.80 March, with resistance of 86.30, 88.00 and 89.00 March.
General Comments: FCOJ was mixed to a little lower again yesterday despite a late week rally last week based on smaller Florida production estimates from USDA. DJ News highlighted the tough environment in Florida for production this year and demand mor generally in an article published yesterday. 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.
General Comments: New York and London were both higher even 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 higher today at 0.858 million bags. 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. Support is at 150.00, 142.00, and 140.00 March, and resistance is at 159.00, 163.00 and 166.00 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.
DJ Brazil’s Conab Forecasts Total 2023 Coffee Crop of 54.9M Bags
By Jeffrey T. Lewis
SAO PAULO–Brazilian government crop agency Conab said Thursday it expects the country’s farmers to produce a total coffee crop of 54.9 million bags in the 2023 growing season, an increase of 7.9% from 2022.
Brazil, the world’s biggest producer and exporter of coffee, will produce 37.4 million 132-pound bags of the more popular arabica variety of beans, up from 32.7 million bags in 2022. The country will grow 17.5 million of the stronger robusta variety of coffee, compared with 18.2 million bags last year.
Brazil’s arabica coffee plant development and production normally follow a two-year cycle, with smaller crops in odd-numbered years as the plants grow the branches that will bear the usually much bigger crop produced in even-numbered years. But frosts and droughts in 2021 hit the development of the plants and the arabica crop was only slightly bigger in 2022 than the previous year.
The area planted with arabica should increase this year from 2022, Conab said. Increased productivity on farms in the state of Minas Gerais, which grows most of Brazil’s arabica crop, and in the states of Sao Paulo and Parana should also help boost overall output of the variety, according to the agency.
Robusta production in Brazil is normally much less variable than arabica, though bad weather in the state of Espirito Santo, which produces most of the country’s robusta crop, can result in wide swings in production from one year to the next. Brazil had a record harvest of robusta in 2022, but unhelpful weather last year affected plant development and the crop this year will be a bit smaller than last year, according to Conab.
General Comments: New York and London closed lower yesterday on what appeared to be speculative long liquidation. 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 to up with objectives of 2040, 2100, and 2160 March. Support is at 1950, 1930, and 1890 March and resistance is at 2030, 2050, and 2120 March. Trends in London are mixed to up with objectives of 573.00 and 603.00 March. Support is at 547.00, 537.00, and 5235.00 March and resistance is at 562.00, 565.00, and 568.00 March.
General Comments: New York and London closed lower yesterday on what appeared to be speculative profit taking related to weaker Asian demand shown by the grind data. Talk is that hot and dry conditions reported in Ivory Coast could curtail mid crop production. Asian Cocoa grindings were 230,806 tons in the fourth quarter of last year, from 231,309 tons in 2021. Calendar year 2022 Cocoa grindings were 904,094 tons, up 3.1% from 2021. 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 lower today at 4.877 mi0lion bags.
Chart Trends: Trends in New York are mixed to up with objectives of 2700, 2750, and 2860 March. Support is at 2620, 2590, and 2570 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.