Coffee Markets Drop Amid Contrasting Supply Trends and Weather Challenges

Wheat: The markets were lower in Chicago, but higher in the other markets with the best price action on Friday seen in Minneapolis. World Wheat demand has been strong with Saudi Arabia buying over 800,000 tons of optional origin Wheat as tender results were announced early this week that likely to come from Russia, Europe, and perhaps South America. There has not been much demand in world markets for US Wheat.

Tensions remined high between Ukraine, the US, and Russia. The growing conditions in the US are very good. Reports of very beneficial rains for the Great Plains and Midwest and reports of steady to firm prices quoted in Russia and steady prices Argentina were around and helped keep the US market mostly steady in current ranges. Wheat farmers in the US planted the Winter crops under good conditions. Australia has seen too much rain recently that has downgraded Wheat quality, but Australia still has a very big crop to sell into world markets.

Weekly Chicago Soft Red Winter Wheat Futures

Weekly Chicago Hard Red Winter Wheat Futures

Weekly Minneapolis Hard Red Spring Wheat Futures

Corn: Corn closed higher last week on what appeared to be new buying tied to stronger weekly export sales. The export demand in recent weeks has been very strong and it seems like some of the buying is in anticipation of the new presidential regime starting here in January. President Trump has promised new tariffs on goods and services and some buyers may be making purchases now to avoid the potential for the tariff at a later date. There were no sales announcements in the daily reports from USDA in the last week. Oats were lower.

Weekly Corn Futures

Weekly Oats Futures

Soybeans and Soybean Meal: Soybeans were a little lower and Soybean Meal closed higher last week on the back of very strong weekly export sales reports for Soybeans. Meal was supported on spreads against Soybean Oil and posted a reversal on the weekly charts. Supplies are very large now and look to get even bigger with the coming South American harvest. Talk that President Trump wants to stop the use of bio fuels as part of his war on the green economy hurt demand ideas for Soybean Oil. The tariffs that Trump plans to impose could be a detriment to sales of all products.

Brazil looks to produce much more than a year ago and some estimates range as high as 175 million tons for the country. Brazilian farmers have planted what is expected to be a very big crop in central and northern areas of the country. Warm and dry weather in the Midwest this year has hurt US production ideas due to ideas of small and very dry beans in the pods. Demand has been very strong so far this year, in part as many buyers try to get bought ahead of any new tariffs that the Trump administration might impose. Even so, supplies are very large and ending stocks projections for the USDA WASDE reports are a burden for prices.

Weekly Chicago Soybeans Futures

Weekly Chicago Soybean Meal Futures

Rice: Rice closed sharply lower last week on what appeared to be liquidation selling by market longs. Commercials and speculators seemed to be sellers. The trends are down on the daily charts. Generally weak Asian prices are still reported. Brazil prices remain strong and well above US prices but the difference is now less to world buyers as the Real is much lower against the US Dollar.

Weekly Chicago Rice Futures

Palm Oil and Vegetable Oils: Palm Oil was lower last week on ideas that Palm is overpriced in the world market when compared to other vegetable oils. Demand from China has not been good and demand from India has been reduced. Ideas of weaker production caused by too much rain and reports of good demand provided support. Canola was higher with Chicago.

The charts show that a low has been completed but that the rally off the lows has run out for now. Prices tested the breakout area higher and held last week, so the uptrend might be starting again. The harvest is over in Canada and the crops are locked away in the bin. Producers will try to wait for higher prices before selling much, especially with the cold weather in place now.

Weekly Malaysian Palm Oil Futures:

Weekly Chicago Soybean Oil Futures

Weekly Canola Futures

Cotton: Cotton was lower again last week and made new lows for the move and new contract lows. The trends are down. Selling has come from news that Trump will impose some big tariffs on China, but the tariffs posted were not as high as he had threatened before during the campaign.

China has big problems with its domestic economy with consumer buying interest not strong and many people not working. The government has said it will take stimulus measures for the economy there next year. There are still reports of weaker demand potential against an outlook for good US production in the coming year.

Weekly US Cotton Futures

Frozen Concentrated Orange Juice and Citrus: FCOJ closed higher yesterday and the chart trends are mixed on the daily charts and are still turning up on the weekly charts. The short term supply scenario remains very tight. The market remains well supported in the longer term based on forecasts for tight supplies in Florida.

The reduced production appears to be mostly at the expense of the greening disease and some extreme weather seen in the last couple of years. There are no weather concerns to speak of for Brazil or Florida right now

Weekly FCOJ Futures

Coffee: New York and London closed lower last week as tight Arabica coffee availability went against increasing availability of Robusta coffee with the harvest of Robusta continuing and expanding in both Vietnam and Brazil. Reports of reduced coffee offers from Brazil on weather induced short crops continue and there are also reports of too much rain in parts of Central America damaging coffee crops there.

There are reports from Brazil that coffee producers have already sold a lot of Coffee and are holding back on selling more even with good demand. Coffee offers from Vietnam are increasing now as the harvest has been expanding. There are reports for good rains in Brazil as the rainy season is now under way after very dry conditions.

Weekly New York Arabica Coffee Futures

Weekly London Robusta Coffee Futures

Sugar: New York and London closed moderately higher on Friday on what seemed to be speculative short covering, but both markets were lower for the week. The current Brazil rains have kept the har-vest and crushing pace down but could provide a boost to production for next year. Trends are down in both markets on the daily charts and on the weekly charts in both markets.

Indian and Thai mills are expecting strong crops of cane. It is also wet in Brazil, and this has affected harvest progress. Supplies available to the market could be less in the next six months due to adverse growing conditions seen in Brazil during the production period. Total Brazil production has been affected by drought seen earlier in the year and the fires that destroyed crops in some areas.

Weekly New York World Raw Sugar Futures

Weekly London White Sugar Futures

Cocoa: New York and London closed higher last week, but well off the highs on what appeared to be speculative profit taking seen later in the week. There is talk that production will be short of demand for the fourth year in a row.

Chart trends are up in both markets on the daily charts. Producers in Ghana and in Ivory Coast have been fighting against too much rain that has made it hard to harvest and deliver crops. It has been very dry in West Africa lately. The trade also noted ICE-certified cocoa stocks have been rising of late, but that overall cocoa supply is set to remain sharply constrained for several seasons due to structural problems in Ivory Coast and Ghana.

Weekly New York Cocoa Futures

Weekly London Cocoa Futures

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(Featured image by Mark Daynes via Unsplash)

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