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
DJ Food Prices Fell in August, But Rice Prices Hit 15-Year High
By Yusuf Khan
Food prices fell in August as a strong supply of wheat, corn and other key foodstuffs helped to lower global food commodity prices, but risks remain for rice, the cost of which jumped after the introduction of Indian export restrictions, the Food and Agriculture Organization of the United Nations said Friday.
The UN FAO’s food price index, which tracks global prices for a basket of staple foods, averaged 121.4 points in August, down 2.1% from July, putting prices 24% lower than the March 2022 peak. The Rome-based body said that much of the decline was led by lower dairy and vegetable oil prices helping to ease inflation worries for policy makers.
That said, the UN FAO highlighted skyrocketing prices for rice, with its price index up 9.8% during the month–hitting a 15-year high–following significant trade disruptions after India introduced a ban on exports for Indica white rice.
The country is the world’s largest rice exporter and uncertainty about the ban’s duration and concerns over export restrictions caused “supply-chain actors to hold on to stocks, renegotiate contracts or stop making price offers, thereby limiting most trade to small volumes and previously concluded sales,” the report said.
Outside of rice, cereal prices overall were down 0.7% from July to , with wheat down 3.8% and coarse grains such as corn down 3.4% amid strong supply from exporting countries such as Russia and Brazil, respectively.
Vegetable oil prices fell 3.1% in August to an index of 125.8, led by falls in sunflower oil, with weakening demand and strong supply of other vegetable oils pushing prices lower. The August decline, however, comes off the back of a 12% hike in July, putting prices roughly just below where they were in April.
Prices for sugar rose 1.3% in August, some 34.1% higher than a year ago. The FAO said that most of this has been led by worries over poor harvest triggered by the El Nino weather phenomenon.
“In India, below-average rains in August were detrimental to sugarcane crop development, while persistent dry weather conditions in Thailand are expected to negatively affect the 2023-24 sugar production.”
Elsewhere, dairy prices fell 4% from July, marking the eighth consecutive month of decline and putting prices 22% lower than a year ago. Meat prices were down 3% to 114.6 points in August, led by falling prices for sheep and chicken.
General Comments: Cotton closed lower again yesterday on some long liquidation by speculators but reports of stressful conditions for US Cotton production continue. Ideas are around that Chinese economic data implies less US cotton demand for the coming year but demand from other buyers has been good. There is more talk of a contraction that could develop in China and Cotton demand could be hurt if people have less money to spend on clothes. The heat is still extreme in the southern US and has yet to moderate. Ideas of weaker demand due to economic problems in Asia continue and Chinese economic data continues to show weakness. There are still many concerns about demand from China and the rest of Asia due to the slow economic return of China in the world market.
Overnight News: The Delta will get isolated showers and above normal temperatures. The Southeast will see isolated showers and near to above normal temperatures. Texas will have scattered showers and near to above normal temperatures. The USDA average price is now 80.89 ct/lb. ICE daily certified stocks are now 2,352 bales, from 2,352 bales yesterday. USDA said that weekly net Upland Cotton export sales were 85,100 bales this year and 6,400 bales next year. Net Pima sales were 2,800 bales this year and 0 bales next year.
Chart Trends: Trends in Cotton are down with objectives of 8170 and 7740 December. Support is at 84.90, 84.40, and 83.40 December, with resistance of 87.60, 89.00 and 90.00 December.
General Comments: FCOJ closed higher again yesterday in range trading. CitrusBR last week estimated stocks were estimated at 84,745 tons for last season. This was the lowest estimate since 2012 when data collection started and stocks were estimated below 100,000 tons. Production for next year is expected to drop a bit due to weather concerns. Futures remain supported by very short Oranges production estimates for Florida. Futures are also being supported in forecasts for an above average hurricane season that could bring a storm to damage the trees once again. 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 products 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
Overnight News: Florida should get isolated showers. Temperatures will average near normal. Brazil should get mostly dry conditions and near to above normal temperatures. ICE said that 0 notices were posted for delivery against September futures and that total deliveries for the month are now 0 contracts.
Chart Trends: Trends in FCOJ are mixed to up with objectives of 356.00 and 382.00 November. Support is at 311.00, 305.00, and 291.00 November, with resistance at 324.00, 333.00, and 338.00 November.
General Comments: New York and London closed lower on strength in the US Dollar and ideas of weaker demand from roasters. Offers from Brazil and other countries in Latin America should be increasing but prices are considered a little cheap to create much selling interest from producers. The Brazil harvest moving quickly and this fact has pressured prices. Vietnam is not offering much Coffee into the world market as domestic cash prices are very high. There are still tight Robusta supplies for the market amid strong demand for Robusta with no offers from Vietnam in the world market due to very high domestic prices.
Overnight News: ICE certified stocks are lower today at 0.458 million bags. The ICO daily average price is now 151.58 ct/lb. Brazil will get mostly dry conditions with near to above normal temperatures. Central America will get mostly dry conditions. Vietnam will see scattered showers. ICE NY said that 15 contracts were tendered for delivery against September futures and that total deliveries for the month are now 1,053 contracts.
Chart Trends: Trends in New York are mixed. Support is at 147.00, 145.00, and 142.00 December, and resistance is at 158.00, 160.00 and 163.00 December. Trends in London are mixed. Support is at 2400, 2350, and 2320 November, with resistance at 2480, 2530, and 2570 November.
DJ Africa Coffee Exports Fell 1.4% in July as Ethiopia, Ivory Coast Trade Slowed
By George Mwangi
Special to Dow Jones Newswires
African green coffee bean exports fell by 1.4% on year in July, largely due to reduced exports from Ivory Coast and Ethiopia, the International Coffee Organization said late Thursday.
Green coffee bean exports from the continent fell to 1.37 million 60-kilogram bags in July compared with 1.39 million bags the same month of the previous year, the ICO said in its monthly report.
In July, combined exports from Ivory Coast and Ethiopia fell by 26.7% on year, it said. In Ethiopia, exporters are withholding coffee beans amid a dispute between international buyers and local producers about prices paid for the crop.
Conversely, Tanzania and Uganda experienced a strong growth rate, with a combined increase of 23.6% in July, it said.
Uganda, Africa’s current largest coffee exporter, increased its exports by 12.0% in July, driven by a good crop harvest in the South-Western Region, and exporters releasing their stocks, it said.
For the first 10 months of the current coffee year beginning October 2022, exports from Africa totaled 10.84 million bags, compared with 11.27 million bags the prior year, the report said.
Meanwhile, the ICO composite indicator average price lost 1.9% to $1.55 a pound in August compared with the prior month, it said.
The Robustas remained at a near-record high in August at $1.25 a pound, the ICO said.
General Comments: Both markets closed higher. The Asian supply situation became more pronounced this week with dry weather the main feature. Traders are more worried about the lack of Sugar exports from India than they are about actual exports from Brazil. The Indian monsoon is expected to withdraw early this year and leave Sugarcane high and dry. Many growing areas have been dry, anyway. There are also worries about the Thai production potential in this year of El Nino. Reports of increased offers from Brazil are still around but other origins are still not offering, and demand is still strong. Brazil reports very good harvest conditions but the weather in Southeast Asia is currently dry. Indian production is less this year and Pakistan also has reduced production and the monsoon has been uneven so far in both countries. Thailand production is also down a lot this year and many Asian countries are worried about El Nino impacting future production.
Overnight News: Brazil will get mostly dry conditions. Temperatures should average near to below normal. India will get mostly dry conditions and below normal temperatures.
Chart Trends: Trends in New York are up with objectives of 2770 March. Support is at 2600, 2540, and 2500 March and resistance is at 2740, 2770, and 2800 March. Trends in London are mixed. Support is at 703.00, 693,00, and 690.00 December, with resistance at 737.00, 748.00, and 754.00 December.
General Comments: New York and London closed lower on what was reported to be speculative profit taking after both markets ran to new highs earlier in the week only to fall back into the trading ranges. Ideas of tight supplies remain based on more reports of reduced arrivals in Ivory Coast and Ghana continue, Talk is that hot and dry conditions reported earlier in Ivory Coast could curtail main crop production, and main crop production ideas are not strong. Midcrop production ideas are lower now with diseases reported in the trees due to too much rain that could also affect the main crop production.
Overnight News: Isolated showers 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 isolated showers and near to above normal temperatures. ICE certified stocks are lower today at 5.133 million bags. ICE NY said that 0 notices were posted for delivery against September futures and that total deliveries for the month are now 942 contracts.
Chart Trends: Trends in New York are mixed. Support is at 3570, 3550, and 3490 December, with resistance at 3710, 3740, and 3770 December. Trends in London are mixed. Support is at 2810, 2760, and 2740 December, with resistance at 3000, 3010, and 3040 December.