Coffee Futures in New York and London Closed Lower Last Week

Wheat: Wheat markets were lower last week on what appeared to be fund selling. USDA said that US Wheat is now just 19% good to excellent in its monthly update on conditions. Damage from the extreme cold was done two weeks ago to an already damaged HRW crop. The cold weather could have produced some Winterkill in US production areas to make a small crop even smaller. Temperatures were very cold and blizzard conditions were reported farther north due to high winds blowing the snow and probably the ground into the atmosphere. The demand for US Wheat in international markets has been a disappointment all year and was hindered by low prices and aggressive offers from Russia.  Ukraine is also looking for new business for its crops and Russia is aggressive in the world market as it looks for cash to fund the war.  The demand for US Wheat still needs to show up and there is still not enough demand news to help support futures but this could now change due to the moves by the insurers. 

Weekly Chicago Soft Red Winter Wheat Futures

Weekly Chicago Hard Red Winter Wheat Futures

Weekly Minneapolis Hard Red Spring Wheat Futures

Corn: Corn and Oats closed lower last week on ideas of less demand and the potential for USDA to raise ending stocks estimates in the next WASDE reports. Producers in the US are not selling as many are waiting for a rally to sell into. Demand for US Corn remains muted and forecasts for only light rains or dry conditions in southern Brazil and Argentina were seen.  Brazil has been hanging on but Argentina has suffered through some extreme drought.  Weak demand overall for US Corn remains a big problem for the market. There are increasing concerns about demand with the Chinese economic problems caused by the lockdowns creating the possibility of less demand as South America has much better crops this year to compete with the US for sales. China is now moving rapidly to open the economy and allow people to move around with no lockdowns so the demand could start to improve. South American prices are currently close to or above than those in the US. 

Weekly Corn Futures

 Weekly Oats Futures

Soybeans and Soybean Meal: Soybeans were lower last week on what appeared to be fund selling.  Soybean Meal closed at new contract highs in the March contract and Soybean Oil was about unchanged. Farmers are not selling many Soybeans in the US as many are waiting for a rally to sell into.  Significant rains were reported in some provinces in Argentina last weekend, but last week and this week look dry for all of Argentina and for southern Brazil. Drier weather is the forecast for this week for southern Brazil and Argentina which could stress crops in both areas again, Central and northern Brazil remain in very good condition with scattered showers reported. Production potential for 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. There was news that China has started to ease Covid restrictions after some demonstrations by the Chinese people.  Ideas that Chinese demand will improve, but this could take some time as a very large part of the population now has Covid. This has delayed a robust economic return for the country. Export demand for the US is improved from previous weeks and is on pace for what is needed to meet USDA projections. 

Weekly Chicago Soybeans Futures:

Weekly Chicago Soybean Meal Futures

Rice: Rice was lower on what appeared to be fund and commercial selling. Some buying appeared starting late Thursday and the market closed in mid-range for the week. There is not much going on in the domestic market right now. Most Rice farmers were not paying much attention to the market.  Demand in general has been slow to moderate for Rice for both exports and domestic uses. Congress included support payments of two cents per pound for Rice producers in its financing bill for the next year and the bill should be signed by President Biden. At least some traders expect more selling interest to show up this week. Demand ideas got a boost when Iraq bought 104,000 tons of Rice in the last week or so.   

Weekly Chicago Rice Futures

Palm Oil and Vegetable Oils:  Palm Oil closed lower last week as demand ideas remain uncertain.  Indonesia will now permit exporters to sell six tons for every tons sold internally instead of eight as before.  Ideas of better demand and less production are still around, with production falling due to seasonal factors.  Hopes for improved demand from China were reported. China has tried to relax some Covid restrictions so that the economy can start to function again.  However, new outbreaks of the virus are being reported and infection rates are rapidly increasing.  Ideas are that supply and production will be strong, but demand ideas are now weakening and the market will continue to look to the private data for clues on demand and the direction of the futures market. There are still reports of too much rain in Malaysia. Canola was a little higher in range trading on currency considerations as the US Dollar rallied against the Canadian Dollar. Ideas that Chinese demand can remain weak due to increased outbreaks of Covid there were negative.  Demand for export has been less. Farmers are holding tight to harvested supplies. 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. 

Weekly Malaysian Palm Oil Futures

Weekly Chicago Soybean Oil Futures

Weekly Canola Futures:

Cotton: Cotton was higher last week and remains firmly inside the trading range created over the last couple of months. 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.  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. The people there do not trust the government vaccines. Demand has not improved with the reduction in prices and a lower US Dollar to date.  Production in the US is very short. 

Weekly US Cotton Futures

Frozen Concentrated Orange Juice and Citrus: FCOJ was higher last week in range trading, with worries still around about freeze damage to crops this weekend from freezing temperatures. Trends are trying to turn up again on the daily charts. Demand should start to improve now with the holidays now over.  Futures look weak on the daily charts. 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. 

Weekly FCOJ Futures

Coffee: New York and London closed lower last week as the Brazilian Real moved lower against the US Dollar and encouraged selling from Brazil producers. Producers were more active this week in Vietnam and Latin America due to the new year and the coming Tet holiday. Vietnamese sellers should remain more active in the next couple of weeks as they try to get sales on the books before the Tet holiday.  Buying interest is also reduced, but the ideas are that the buy side needs Coffee now. Buyers are expected to look for Coffee at the origin starting this week. Ideas of reduced Brazil production and reports of reduced offers into the cash market from Brazil and Vietnam continue, but the weather is good in Brazil and improving in Vietnam. There are ideas that the 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 when the next harvest comes in a few months.  

Weekly New York Arabica Coffee Futures

Weekly London Robusta Coffee Futures

Sugar: New York and London closed lower again last week.  Ideas are that mills in Brazil will be encouraged to produce more Sugar than Ethanol. These ideas were enhanced by the news that Brazil president Lula has frozen fuel taxes at current levels, giving Ethanol producers a reason to switch to Sugar as profit margins could be squeezed by the tax moves. The harvest has been delayed in Thailand.  Australia and Central America harvests are also delayed.  India is producing White Sugar mostly from Raws imported from Brazil, so the market is thought to be short Raw Sugar.  There is talk that production in India will be reduced this year after some bad weather and reduced yields reported in Maharashtra.  Reports indicate that Indian mills have produced 30% more Sugar than last year until now for the current marketing year.  The weather in Brazil remains good for the next crop but bad for harvest and loading at ports as it is still raining in production areas.  World Sugar is expected to be in a big surplus production next year. 

Weekly New York World Raw Sugar Futures

Weekly London White Sugar Futures

Cocoa: New York and London closed lower last week with the biggest losses in New York due to currency considerations. Ivory Coast arrivals appear to have improved lately with the recent rally in futures prices.  Ivory coast arrivals are now 1.172 million tons, up 14% from last year.  The Ivory Coast Cocoa grind is now 113,803 tons, up 6.9% from last year.  Good production is reported 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. 

Weekly New York Cocoa Futures

Weekly London Cocoa Futures

__

(Featured image by Nathan Dumlao via Unsplash)

This article may include forward-looking statements. These forward-looking statements generally are identified by the words “believe,” “project,” “estimate,” “become,” “plan,” “will,” and similar expressions. These forward-looking statements involve known and unknown risks as well as uncertainties, including those discussed in the following cautionary statements and elsewhere in this article and on this site. Although the Company may believe that its expectations are based on reasonable assumptions, the actual results that the Company may achieve may differ materially from any forward-looking statements, which reflect the opinions of the management of the Company only as of the date hereof. Additionally, please make sure to read these important disclosures.

Futures and options trading involves substantial risk of loss and may not be suitable for everyone. The valuation of futures and options may fluctuate and as a result, clients may lose more than their original investment. In no event should the content of this website be construed as an express or implied promise, guarantee, or implication by or from The PRICE Futures Group, Inc. that you will profit or that losses can or will be limited whatsoever. Past performance is not indicative of future results. Information provided on this report is intended solely for informative purpose and is obtained from sources believed to be reliable. No guarantee of any kind is implied or possible where projections of future conditions are attempted.  The leverage created by trading on margin can work against you as well as for you, and losses can exceed your entire investment. Before opening an account and trading, you should seek advice from your advisors as appropriate to ensure that you understand the risks and can withstand the losses.