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
Weekly Ag Markets Update – 03/06/2023
Wheat: Wheat markets were lower last week. It is possible that Wheat is trying to find a bottom at this time. The funds maintain a huge short position in this market. The problem remains demand as world supplies are not so large and US inventories are less as well. Ideas that big Russian offers and cheaper Russian prices would be a feature for a while in the world market was the driving force for the weaker prices, and price weakness could continue. The war in Ukraine continues, but Russia is expected to allow the grain export program to continue in one form or another. Ideas are that both Australia and Russia are harvesting record to near record Wheat crops this year. Russia has a large production and is undercutting most world prices in the international market. The demand for US Wheat in international markets has been a disappointment all year and has been hindered by low prices and aggressive offers from Russia.
Weekly Chicago Soft Red Winter Wheat Futures
Weekly Chicago Hard Red Winter Wheat Futures
Weekly Minneapolis Hard Red Spring Wheat Futures
Corn: Corn closed a little lower last week and tested low levels not seen since late las on ideas of weak demand. Oats closed lower and at new lows for the move. The export inspections report released last Monday afternoon showed bad exports once again and the US is falling far behind the pace to meet USDA targets. The export sales report released last Thursday showed weaker sales as well. The lack of demand has been a reason for all the selling in the last seven days. Wire reports yesterday showed that India is now making sales to Southeast Asia instead of the US. US prices are currently very competitive with those from South America and US demand could improve because of the price differentials. Prices from South America should now remain strong as countries there concentrate on Soybeans exports, so the US has a chance now to see export demand improve. Brazil has been hanging on for its Summer crop although losses are now being reported. The situation is now more stable in southern Brazil and northern Argentina after recent rains, but the situation in central and southern Argentina remains stressed. Argentina has suffered through some extreme drought and losses could be large. The Brazil Winter crop is harvested and China has been buying the surplus. The Summer crop and the Argentine crop is developing under stressful conditions. The next Winter crop is going into the ground in good conditions, but it has been wet so the Soybeans harvest has been delayed and the Corn planting is becoming delayed as well. Reports indicate that the weather is now better in central and northern Brazil and that the Corn planting pace is much improved. However, Brazil sources say that 20% of the Winter crop could be planted outside of the ideal window so yields could be hurt in the end. China released its PMI data earlier this week and the PMI weas above expectations. It was considered positive for new demand potential from China.
Weekly Corn Futures
Weekly Oats Futures
Soybeans and Soybean Meal: Soybeans and the Soybean Meal were slightly higher last week on speculative buying despite a weak export sales report that showed Soybeans sales at a marketing year low. Soybean Oil closed a little lower. Soybeans export demand is flowing to Brazil now. Argentina is the world’s largest exporter of Soybeans products while the US and Brazil battle for supremacy in Soybeans exports. The South American harvest coming to export channels in the near future and the lack of exports for the US has hurt the price action and created down trends for Soybeans and sideways to down trends for the products. It remains hot and dry in Argentina and crop conditions are getting worse. Weather is becoming less important now as the harvest is already underway in central and northern Brazil and will spread south soon. Sothern Brazil and northern Argentina are getting enough rain to stabilize conditions and production losses but central and southern Argentina remain very dry. Central and northern Brazil have seen harvest operations interrupted with too much rain but the weather is now improving and the harvest pace is increasing. Production potential for the Brazil is called very strong even with potential problems and losses in the south. Argentine production ideas continue to drop with the drought as planting is delayed and the crops already in the ground are stressed. Chinese demand is improving in the world market and especially in Brazil with the country now open and many starting to move beyond Covid and create life and opportunity again.
Weekly Chicago Soybeans Futures
Weekly Chicago Soybean Meal Futures
Rice: Rice was higher in recovery trading and despite weak export sales as offers into the market appear less. Demand has been good from domestic sources. Export demand has been uneven. Demand has been an issue for the market all year. There is not much going on in the domestic market right now although mills are milling for the domestic market in Arkansas and are bidding for some Rice. Markets from Texas to Mississippi are called quiet. Demand in general has been slow to moderate for Rice for exports.
Weekly Chicago Rice Futures
Palm Oil and Vegetable Oils: Palm Oil closed higher last week in response to Chinese PMI data that showed that the Chinese economy is recovering and implied that China could soon increase Palm Oil imports. Futures were also higher on reports of flooding in Malaysia that caused production concerns. China was a noted buyer of Palm Oil last week. Indonesia is now revoking some export permits to keep internal prices controlled and to support the bio fuels industry. The controls are expected to last through Ramadan. Peninsular Malaysia is getting flooding rains. Flash floods are being reported. Canola was higher last week on demand concerns as ideas that Brazil will capture demand for the world market. Brazil is expected t dominate the oilseeds market for the next few months. Reports indicate that domestic demand has been strong due to favorable crush margins. Production was much improved this year on better weather during the Summer. It is dry in the southern and southwestern prairies now and this could mean reduced yields when the production season begins in a couple of months.
Weekly Malaysian Palm Oil Futures
Weekly Chicago Soybean Oil Futures
Weekly Canola Futures
Cotton: Cotton was lower last week on a weaker export sales report from USDA. Demand was very strong in the report the previous week and has been ramping up for the last couple of months, but fell off. Some ideas that demand could soon increase more as China could start to open its economy in the next couple of months as Covid outbreaks should start to weaken as people get vaccinated or immune. Covid is now widespread in China so the beneficial economic effects of the opening have been delayed but these effects are being felt as the people there achieve immunity. China has also started buying again from Australia after refusing imports from that country for political reasons. The charts show that futures held at a test of the lows formed since November and that prices could start to move higher to the top end of the range at about 90 cents in the next few weeks.
Weekly US Cotton Futures
Frozen Concentrated Orange Juice and Citrus: FCOJ was sharply higher last week but near the lows of the week after a wild week of trading. Production remains the overriding force. Historically low estimates of production due in part to the hurricanes and in part to the greening disease that have hurt production, but conditions are significantly better now with scattered showers and moderate temperatures. The weather remains generally good for production around the world for the next crop including production areas in Florida that have been impacted in a big way by the two storms seen previously in the state. Brazil has some rain and conditions are rated good. Brazil continues to export to the EU and is increasing its exports to the US. Mexico is also exporting to the US. The Florida Dept of Citrus reported that inventories are still 40.0% below last year.
Weekly FCOJ Futures
Coffee: New York closed lower on improved rains for Brazil growing areas and London closed higher on price action tied to higher differentials in Brazil and Vietnam caused by a lack of offers from producers in both countries. There is also a lack of offer from Colombia, but differentials are reported to dropping there. Central America differentials remain firm with not much demand showing. Vietnam exported 323,000 tons of Coffee in the first two months of the calendar year this year, down 13.1% from last year. It seems that the market has decided that prices have captured the lack of offer in the cash market for now. Ideas of big production for Brazil continue due primarily to rains falling in Coffee production areas now. Vietnam is estimated to have very good production this year due to a good growing season. There are ideas that production potential for both countries has been overrated. 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. Vietnam is getting less rain now to aid harvest progress but volumes offered have not increased.
Weekly New York Arabica Coffee Futures
Weekly London Robusta Coffee Futures
Sugar: New York closed lower and London closed higher last week and both markets turned the chart trends to up on Friday. Brazil production is set to recover this year with production estimated by Datagro at 38 million tons in Center-South areas. Raizen SA, an energy producer, said that millers will produce 48% Sugar and the rest Ethanol this year. The trade had estimated the Sugar share at 46%. Indian production is thought to be 33 million tons this year or less and the market has had to ration that supply via price. A local source told the wire services yesterday that India could still export 1.0 million tons more of Sugar if production rises to the upper end of trade expectations, otherwise India is about out of Sugar available for export. Mills in Maharashtra have closed already due to the lack of cane to crush. Mills in the state are usually open for a couple more months. Even so, Indian mills have produced 28.5 million tons of Sugar, up 1.8% from last year, according to the Indian Mills Association. Thailand expects to export 7% more than last year. Good production prospects are seen for crops in central and northern areas of Brazil, but the south has seen drier weather. There is concern that the rainy areas will stay too wet and delay the harvest and dilute the Sugar concentrations in the cane in central areas. The harvest is active in Thailand. Australia and Central America harvests are also active. European production is expected to be reduced again this year, with French planted area likely to decline to a 14 year low for Sugarbeets.
Weekly New York World Raw Sugar Futures
Weekly London White Sugar Futures
Cocoa: New York and London closed a little higher last week as West African exporters are not offering. Wire reports suggest that exporters are currently looking for Cocoa to make good on current contracts and are not entering into new contracts right now. However, the Ivory Coast Cocoa and Coffee Council said that there will be more than enough Cocoa for export and that exporters can fix contracts. The Council has also restricted some of the big buyers like Cargill and Callebrut from buying more as they have reached volume limits on purchases. Wire reports said that a lot of Ivory Coast Cocoa is getting smuggled to other countries for export due to higher prices being paid. Trends are up in both New York and London. Talk is that hot and dry conditions reported in Ivory Coast could curtail mid crop production, but main crop production ideas are strong. Ghana has reported a disease in its Cocoa to hurt production potential there. The rest of West Africa appears to be in good condition. Good production is reported for the main crop and traders are worried about the world economy moving forward and how that could affect demand. The weather is good in Southeast Asia. The ICCO said yesterday that it expects a production deficit of 60,000 tons this marketing year.
Weekly New York Cocoa Futures
Weekly London Cocoa Futures
Questions? Ask Jack Scoville today at 312-264-4322