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Corn Demand Needs to Hold to Keep Lower Ending Stocks Estimates in Play

Corn closed lower on Friday and near unchanged for the week as the US Dollar moved sharply higher and as the harvest comes closer in the US. Oats were also about unchanged for the week after moving sharply lower on Friday. The cash market has been strong as the trade is worried about the availability of US Corn in the short run and Ukraine Corn overall. 

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Wheat: Wheat markets were lower on Friday as the US Dollar moved sharply higher, but higher for the week on supply concerns tied to the Ukraine-Russia war and dry and hot weather seen once again in the western US Great Plains and much of Argentina. Russia has called for new recruits of 300,000 men for the war and threatened once again to use nuclear weapons to get its way in Ukraine.  Those countries still need to get the Wheat out through Black Sea ports, but so far this has not been a problem.  However, Russia is complaining about its sales and shipments as it harvests a big crop, but the west and that the problem with the exports if Russia’s own doings in the Black Sea. The world feels that Wheat is there and people will not go hungry. Russia has threatened to cut off exports from Ukraine unless it can have more exports, too. Russia now appears to be losing the war and could do something rash to try to hold things together. It has moved now to annex the parts of Ukraine it still controls, and the trade expects the war to continue. The demand for US Wheat still needs to show up and right now there is no demand news to help support futures. Europe is too hot and dry and the US central and southern Great Plains have also been too hot and dry. Planting and initial emergence could be affected  Dry weather is affecting the Indian production as well.

Weekly Chicago Soft Red Winter Wheat Futures 

Weekly Chicago Hard Red Winter Wheat Futures

Weekly Minneapolis Hard Red Spring Wheat Futures

Corn: Corn closed lower on Friday and near unchanged for the week as the US Dollar moved sharply higher and as the harvest comes closer in the US. Oats were also about unchanged for the week after moving sharply lower on Friday. The cash market has been strong as the trade is worried about the availability of US Corn in the short run and Ukraine Corn overall. The demand side will need to be watched as Corn demand needs to hold to keep lower ending stocks estimates in play. There are reports of less cattle and that means domestic demand could be hurt. Ethanol demand ideas took a hit last week although Crude Oil moved higher. There are also 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. Ending stocks estimates could be very tight for the coming year if the crop projections hold true.  Basis levels in the Midwest are strong amid light farm selling.  It is still very hot and dry in parts of China and there is increasing concern about Corn production there this year.  It has also been very hot and dry in Europe. 

Weekly Corn Futures

Weekly Oats Futures

Soybeans and Soybean MealSoybeans and the products were a little lower last week as the US Dollar moved sharply higher on Friday and as the US harvest comes closer.  Support came from reports that the US cash markets remain very strong.  The daily Soybeans charts show that Soybeans trends are down with the price action seen on Friday. The trade worried about international weather and supply.  Demand remains an issue for the market to contend with.  The trade is worried about demand due to a lack of Chinese interest caused by the Covid lockdowns there and in part by the stronger US Dollar.  Brazil is still offering and that South America as a whole are expected to produce a very big crop later this year for harvest next Spring. However, a third year of La Nina as predicted by meteorologists could cut the production potential. US production ideas remain strong after mostly good weather in August.  Basis levels are still strong in the Midwest. There are still renewed Chinese lockdowns and there are fears that China has been importing less as a result. 

Weekly Chicago Soybeans Futures:

Weekly Chicago Soybean Meal Futures

Rice: Rice was lower last week on weak export sales as reported in the weekly report and as the harvest pressure mounted.  The US harvest is moving along to completion and yield reports have been variable to good as have been quality reports. Some producers are getting done with harvesting in Texas as well as in southern Louisiana. Yield reports have been generally good in Louisiana and quality reports are generally good.  Yield and quality have been up and down in Texas. Crop conditions are mostly good to excellent for now in Arkansas and Mississippi and the harvest is now very active in both states. Yield reports are variable to very good.

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Weekly Chicago Rice Futures

Palm Oil and Vegetable OilsPalm Oil was lower again last week. There are still ideas of bigger production and less demand, but SGS and AmSpec both reported a big increase in demand in its reports released earlier in the week.  Ideas are that supply and demand 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. That data has been strong this month. Canola was higher on a lower Canadian Dollar.  The Canola harvest approaches. Some of the rally came on continued cash market strength before the harvest.  The Canola growing conditions are much improved and production estimates are higher for the year. The market is still short of Canola in the near term due to the reduced production of last year.

Weekly Malaysian Palm Oil Futures

Weekly Chicago Soybean Oil Futures

Weekly Canola Futures:

Cotton: Cotton closed sharply lower to limit down on Friday and lower for the week as the US Dollar moved sharpy higher and on weak export sales reported in the weekly report. Price trends remain down.  Traders are worried about a global recession and demand in that recession. The late season weather in the Great Plains was better and the crop showed improvement but production is still very short.  The harvest is appearing n the market, and the market is preparing for it with sideways to lower prices.  The trade is still worried about demand moving forward due to recession fears and Chinese lockdowns but is also worried about total US production potential. It is possible that the continued Chinese lockdowns will continue to hurt demand for imported Cotton for that country and that a weaker economy in the west will hurt demand from the rest of the world. 

Weekly US Cotton Futures

Frozen Concentrated Orange Juice and CitrusFCOJ was higher last week as supplies look short for the market. The weather remains generally good for production around the world for the next crop.  Brazil has some rain and the conditions are rated good. More showers are in the forecast for the coming days.  Weather conditions in Florida are rated mostly good for the crops with some showers and warm temperatures. Mexican areas are showing mixed trends, with dry weather in some northern areas but better weather to the south. FCOJ inventories are now 40.8% less than a year ago. 

Weekly FCOJ Futures

CoffeeNew York and London closed lower on Friday but a little higher for the week as the US Dollar rallied sharply on Friday. CONAB earlier in the week estimated total Coffee production this year at 50.38 million bags, from 47.72 million last year and 53.43 million estimated earlier in the year. Arabica production is estimated at 32.41 million bags and Robusta production is estimated at 17.97 million bags.  Small offers in Arabica are reported from Brazil. The weather forecasts for Brazil Coffee areas call for showers.  There is a threat for athird year of La Nina which could negatively affect Coffee production again next year.  Overall Brazil Coffee exports were less in data released last week.  There is concern that Brazil will produce less Coffee this year due to very dry conditions after early rains led to premature flowering.  Vietnam has also been dry and wire reports from there indicate that production losses are likely.  The cash market remains strong.  There is less Coffee on offer from origin, with Brazil offering less and Central America and Vietnam offering less as well. 

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Weekly New York Arabica Coffee Futures

Weekly London Robusta Coffee Futures

SugarNew York and London closed higher last week despite lower moves late in the week, and the nearby months led the way higher as supplies were not strong enough to meet the demand.  It looks like the supply side is still short.  The New York market is worried about ethanol demand in Brazil will force mills down there to continue to produce more Sugar for export and Crude Oil futures have been weaker recently.  The Brazilian president has lowered the fuel taxes in Brazil and this is squeezing the profit margins of the mills. The mills could produce much more Sugar over time due to the tax changes but so far have not produced enough to meet the demand. The London market had been looking for increased White Sugar supplies from origin and now is also worried about demand after recent price strength and because of the loss of economic power generated by the war in Ukraine.  Indian White Sugar exports have so far not been enough to meet the demand.

Weekly New York World Raw Sugar Futures

Weekly London White Sugar Futures

CocoaNew York and London were both lower last week and short term trends started to turn down.  New York was the weakest market as the US Dollar moved sharply higher.  Ideas of big production and uncertain demand are still around but reports from Africa indicate that demand has improved lately.  Trends are mixed in New York. Reports indicate that buyers of Cocoa have enough coverage for now and can afford to wait for lower prices to develop. 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.  Ideas are still that good production is expected from West Africa for the year. The weather is good in West Africa. The weather is good in Southeast Asia. 

Weekly New York Cocoa Futures

Weekly London Cocoa Futures

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(Featured image by vikvarga via Pixabay)

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Jack Scoville is a futures market analyst specializing in grains, softs, rice, oilseeds, and tropical products such as coffee and sugar. In addition to writing daily market commentaries in both English and Spanish, he offers brokerage services to an international clientele of agricultural producers, processors, exporters, and other professional traders. He is regularly quoted by major wire services including Dow Jones, AP, and Reuters. His comments are sourced by newspapers around the world and on various radio and television programs.