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Why Cotton Demand Raises Concern Among Traders

Cotton was a little lower last week with weakness seen in nearby months on ideas of weaker export demand. It is too early to plant in Texas, but the heat and dry weather raises concerns about production potential later in the growing season and blackened soils might not permit much planting, anyway. The demand news has been solid but reduced from previous levels in this market for the last several weeks.




Wheat: Wheat was a little higher last week despite reports of weaker pricer seen in Russia and Europe. Russia is the worlds largest exporter and sets the world price. It looks like the current prices have accounted for most or all of the bad news to hit Wheat futures.

USDA made no changes to its balance sheets last week. Big world supplies and low world prices are still around. Export sales remain weak on competition from Rusia, Ukraine, and the EU as those countries look to export a lot of Wheat in the coming period. It is warm in the US and Canada this week. Black Sea offers are still plentiful.

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 and Oats closed lower last week. Demand for Corn has been strong at lower prices. The Dollar was higher yesterday and could be turning the short term trends up. Big supplies and reports of limited demand are still around, but futures have been very oversold. Futures are much lower than just a few months ago and a short covering rally is increasingly expected and might be under way.

Funds remain very large shorts in the market. Basis levels have started to firm in the US as processors look for supplies amid tight farmer holding patterns. The weather forecasts for Argentina are improving with drier weather expected this week after some big rains last week. More rain is forecast for central and northern Brazil The planting progress reports to date indicate rapid progress and reports from Brazil indicate that the Winter crop has been mostly planted now.

Weekly Corn Futures

Weekly Oats Futures

Soybeans and Soybean Meal: Soybeans and the products closed lower on Friday and mostly lower last week on what appeared to be fund short covering. Soybean Meal closed a little higher last week. Brazil producers had been taking advantage on higher futures in the US and higher basis levels in Brazil, but the basis has fallen sharply in Brazil this week and sales have been less. Reports of great export demand in Brazil provide some support.

Report indicate that China has been a very active buyer of Brazil Soybeans this season. Ideas that South American production is taking demand from the US have pressured futures lower. Funds remain very large shorts in the market. Basis levels in the US are reported to be firming as processors look for supplies and farmers remain tight holders. \Big rains were reported in Argentina last week but it should be drier there this week.

Weekly Chicago Soybeans Futures

Weekly Chicago Soybean Meal Futures

Rice: Rice closed lower last week, and trends are down in this market. Good demand for export continues. The overseas markets feature less production in Brazil and India, and it appears that the lack of offer from these markets is supporting increased demand for US Rice and prices here in the US. It turned wetter and colder in the US last week and fieldwork will be much reduced.

Weekly Chicago Rice Futures

Palm Oil and Vegetable Oils: Palm Oil was lower last week on ideas of stronger production. The export pace is expected to continue to really improve but this is part of the price already. The Southern Peninsula Palm Oil Millers Association expects Malaysia’s palm oil production for March 1-20 to have risen 22%. Domestic biofuels demand is likely to improve. Ideas of weaker production ideas against good demand still support the market overall.

The fundamentals of average demand against a weaker supply outlook are still around to keep prices supported. Trends are up on the daily charts. Canola was a little higher. There were reports of big rains in Argentina, but forecasts for drier conditions now and improving weather in Brazil. Current forecasts call for generally improved growing conditions in Brazil this week.

Weekly Malaysian Palm Oil Futures:

Weekly Chicago Soybean Oil Futures

Weekly Canola Futures

Cotton: Cotton was a little lower last week with weakness seen in nearby months on ideas of weaker export cotton demand. It is too early to plant in Texas but the heat and dry weather raises concerns about cotton production potential later in the growing season and blackened soils might not permit much cotton planting, anyway.

The cotton demand news has been solid but reduced from previous levels in this market for the last several weeks. The US economic data has been positive, but the Chinese economic data has not been real positive and cotton demand concerns are still around.

Weekly US Cotton Futures

Frozen Concentrated Orange Juice and Citrus: FCOJ closed a little lower last week despite reports of tight supplies. Florida said that Oranges production will be low, but above a year ago. Futures still appear to have topped out even with no real downtrend showing yet. Prices had been moving lower on the increased production potential for Florida and the US and in Brazil but is now holding as current supplies remain very tight amid only incremental relief for supplies is forecast for the coming new crop season.

There are no weather concerns to speak of for Florida or for Brazil right now. The weather has improved in Brazil with some moderation in temperatures and increased rainfall amid reports of short supplies in Florida and Brazil are around but will start to disappear as the weather improves and the new crop gets harvested.

Weekly FCOJ Futures

Coffee: Both markets closed higher last week and held the weekly trading range as the lack of Robusta Coffee in the market continues to support futures overall. Robusta offers remain difficult to find and the lack of offer of Robusta is a bullish force behind the London market action.

Vietnamese producers are reported to have about a quarter of the crop left to sell or less with half a marketing year in front of them and reports indicate that Brazil producers are reluctant sellers due to currency considerations. Brazil weather continues to improve for Coffee production and conditions are called good. Rains continued to fall in parts of Brazil Coffee areas.

Weekly New York Arabica Coffee Futures

Weekly London Robusta Coffee Futures

Sugar: New York closed lower and London closed higher last week and futures held to a trading range in New York and are up in London. Ideas of weaker demand are around the market and are causing some selling, but producers do not appear to be selling much. Indian production estimates are creeping high-er but are still reduced from recent years. There are worries about the Thai and Indian production. Offers from Brazil are still active but other origins. are still not offering in large amounts except for Ukraine. Demand reports from Europe have been strong.

Weekly New York World Raw Sugar Futures

Weekly London White Sugar Futures

Cocoa: Futures were higher last week and kept the incredible rally going on production concerns in West Africa as well as demand from nontraditional sources along with traditional buyers. Production in West Africa could be reduced this year due to the extreme weather which included Harmattan condi-tions. The availability of Cocoa from West Africa remains very restricted and projections for another production deficit against demand for the coming year are increasing. Ideas of tight supplies remain based on more reports of reduced arrivals in Ivory Coast and Ghana continue. Demand continues to be strong, especially from nontraditional buyers of Cocoa.

Weekly New York Cocoa Futures

Weekly London Cocoa Futures


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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.