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
Wheat: Wheat markets closed mostly a little higher with SRW little changed in anticipation of the WASDE reports to be released on Tuesday, Ideas are that USDA will cut demand and increase ending stocks. Demand has been poor for US Wheat and should remain bad as Russia production looks strong and exports from Russia have not abated. It is certain that there will be no grain deal soon for Ukraine exports through the Black Sea and any export from the Danube will be difficult if not impossible due to bombing by the Russians. Ukraine will still be able to ship via land through the EU but this is considered to be a very expensive option for them. It is unlikely that any ship owner or ship insurer will take the chance on any passage of Ukrainian grain through the Black Sea, and maybe not for Russia, either. The world access to Wheat from at least one and perhaps both countries is a lot more restricted. Weather forecasts call for drier weather for the northern Great Plains and Canadian Prairies and some areas will be real hot. Canada is now suffering potential crop losses due to dry weather.
Weekly Chicago Soft Red Winter Wheat Futures
Weekly Chicago Hard Red Winter Wheat Futures
Weekly Minneapolis Hard Red Spring Wheat Futures
Corn: Corn was a little higher last week in lifeless trading and Oats were lower in response to the StatsCan production estimates. Ideas that USDA could reduce Corn yields further in coming reports and therefore cut production and ending stocks estimates. The selling earlier in the week had been in response to the USDA reports that showed greater than expected production. Yields were cut but the planted and harvested area was increased by 800,000acres to cause the production increase. It seems possible that yields will be cut more in coming reports. Expectations are for stressful weather to continue Weather forecasts remain mostly dry but with moderate temperatures for the Midwest for the next week. The crops will need rain to maintain the condition due to the lack of soil moisture from three months of drought that ended at the end of June but the crops are not expected to see much rain if any rain at all. The harvest is coming so moisture needs are less, and many producers report that Corn is shutting down early and that the harvest could start sooner than normal. Demand for US Corn in the world market has been very low and domestic demand has been weak due to reduced Cattle and other livestock production. The Brazil Corn harvest is underway and so export prices for Corn from Brazil are getting relatively cheap and Brazil is getting the business.
Weekly Corn Futures
Weekly Oats Futures
Soybeans and Soybean Meal: Soybeans and Soybean Meal were a little lower last week on ideas of weaker demand. Soybean Oil was higher on a lower than expected monthly crush rate and reduced supplies of Soybean Oil to the market qt a time when demand for the feedstocks for biofuels remains high. NOPA estimated the crush by its members at 161.453 million bushels and Soybean Oil stocks at 1.250 billion pounds. USDA cut yield estimates in line with trade expectations but increased planted and harvested acreage by 100,000 acres to keep production estimates higher than the trade had expected. Highly variable conditions were noted especially in western areas. Weather forecasts call for warm and dry conditions for the Midwest. Most longer-range maps indicate the potential for dry weather. Temperatures are expected to be above normal. Ideas are that the top end of the yield potential is gone and severe damage is becoming possible in some areas. Brazil basis levels are still low, and the US is being shut out of the market for most importers, but the US is price competitive now. Brazil is still selling a lot of Soybeans to China and other countries.
Weekly Chicago Soybeans Futures
Weekly Chicago Soybean Meal Futures
Rice: Rice closed higher last week in response to a week of solid export sales and in recovery trading from the lows seen after the release of the USDA crop reports on Tuesday. USDA increased production and also carry in stocks for the coming marketing year and ending stocks were increased as there was not enough new demand shown to absorb the significant supply increase. Trends are up on the daily charts. Yields are called average to below average in Texas and average so far in Arkansas. The quality has been uneven with some crops affected by the extreme heat in southern areas that has hurt field yields in some areas. Some fields are getting abandoned due to extreme heat affecting the production in a very negative way. India will not allow Rice exports except for Basmati for now because not enough rain in some production areas. Northern areas are too wet and southern areas are too dry. It instituted a new 20% tax on White Rice exports.
Weekly Chicago Rice Futures
Palm Oil and Vegetable Oils: Palm Oil was near unchanged as negative fundamentals now went against price strength in outside markets. Support also came from ideas of less production in coming months due to adverse growing conditions caused by El Nini. MPOB estimated production for Augus at 1.703 million tons, up 8.91%, and exports at 1.223 million tons, down 9.78%. Ending stocks were estimated at 2.124 million tons, up 22.54% from July. AmSpec estimated September 1-15 exports at 574,936 tons, from 633,685 tons in August. Both sets of data were bearish for prices, but bullish traders still think that El Nino will cause big production problems down the road and are holding out hopes for rallies in the future.. Canola was lower last week in response to the StatsCan production estimates that showed higher than expected production for the year. Drier weather is generally forecast for the Prairies and the crop has been stressed, but some rain is falling now.
Weekly Malaysian Palm Oil Futures
Weekly Chicago Soybean Oil Futures
Weekly Canola Futures
Cotton: Cotton closed higher last week in range trading and despite a poor weekly export sales report. The USDA reports released on Tuesday showed reduced production and ending stocks estimates. Weak demand is still a problem and export demand was trimmed in the supply and demand reports. 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. 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.
Weekly US Cotton Futures
Frozen Concentrated Orange Juice and Citrus: FCOJ closed a little lower last week despite the USDA reports released on Tuesday that showed production in Florida near unchanged levels at 15.8 million boxes, from 15.7 million last month. Traders are also wary about selling futures due to the hurricane season that could bring a storm to damage crops in Florida again. Hurricane Lee was the latest storm, but the track has kept it away from the southeast US. Another storm is forming in the Atlantic now to bring more risk to the start. Reports of short supplies in Florida and Brazil are around. CitrusBR 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
Weekly FCOJ Futures
Coffee: New York and London closed higher last week as demand for Robusta improved along with a lack of offers from Asia, mostly from Vietnam but also Indonesia. There is not all that much going on in the market that could affect Arabica prices, although demand for cheaper and lower quality Arabica is increasing due to the price differentials with Robusta. 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. Some of this demand has shifted to lower quality Arabicas due to price spreads.
Weekly New York Arabica Coffee Futures
Weekly London Robusta Coffee Futures
Sugar: Both markets closed higher last week as the market continues to see stressful conditions in Asian production areas to keep chart trends mostly up. The Asian supply situation is more pronounced this week with dry weather the main feature, but Brazil is exporting. Traders are worried about the lack of Sugar exports from India. 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 and Indian production potential for this year of El Nino. Reports of 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.
Weekly New York World Raw Sugar Futures
Weekly London White Sugar Futures
Cocoa: New York and London closed higher last week and at new highs for the move as the supply and demand situation remains bullish. Reports of diseases in West Africa that are hurting production continue. The diseases are from too much rain falling at this time. 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.
Weekly New York Cocoa Futures
Weekly London Cocoa FuturesQuestions? Ask Jack Scoville today at 312-264-4322