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Cotton Production Potential Might Be Slipping Further

Cotton was higher last week and trends are up again on the charts. USDA made no changes in its monthly supply and demand updates so futures prices were a little lower on Friday. It did trim slightly the world ending stocks estimates for the next crop. USDA reported good export sales again last week. There are forecasts for hot and dry weather to return this week after some showers in West Texas.

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Wheat: Winter Wheat markets were higher last week as the focus remained on Russia and Ukraine.  Minneapolis Spring Wheat markets were up the l4east as conditions got a little better in the northern US and Canada.  USDA noted mostly stable conditions for the Winter Wheat crops on Monday but noted Spring Wheat planting remained far behind average.  The Winter Wheat harvest is underway in the US.  USDA released its monthly supply and demand updates on Friday and US production of Winter Wheat was increased against trade ideas of a production cut.  Demand increased a little bit as well so ending stocks were trimmed slightly for the current and the next crop.  World ending stocks levels were increased slightly on bigger stocks in Ukraine and Russia.  The government in Russia said again that it was willing to discuss terms with the west for shipments of Ukraine grain to get safe passage, but ideas are that the terms Russia will ask for will be so onerous that they will be rejected.  The UN said negotiations are making progress but there was still a long way to go before any deal could be concluded.  The US western Great Plains got some rainfall and the rains fell in some of the areas most in need of some precipitation.  Hot and dry weather could return this week.  It is turning warmer and drier farther north to give hope to Spring Wheat farmers that they can plant crops.  Europe is too hot and dry and India and Pakistan are both past major heat waves and dry conditions.

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 and Oats were lower.  USDA made no changes to production estimates for the new crop and made no demand changes, either.  Old crop export demand was cut and ending stocks were increased.  The increase was carried forward into the next crop.  The Corn planting is about done now and the crop has emerged under what was considered good conditions.  The areas left to be planted are primarily in the Dakotas and might not get planted as the insurance planting dates have passed.  The risk to plant now would be much higher without the insurance and the high costs of inputs.  There are also pockets of area left to be planted in the big production states.  The weather was variable last week with periods of rain and very cool temperatures and then warm and dry conditions and hot and dry weather is expected this week.  Many think the top end of the yield has been taken off the Corn crop due to the delayed planting but others look at the crop condition rating and expect improved yields.  It already thinks there is reduced planted area because of the March planting intentions reports from USDA and the bad planting weather. 

Weekly Corn Futures

 Weekly Oats Futures

Soybeans and Soybean MealSoybeans and Soybean Meal were higher last week as the US cash market runs low on Soybeans and farmers are reluctant sellers.  Soybean Oil was lower but still found support in part from talk that President Biden plans to retroactively increase bio fuels use to help bring down the prices of Crude Oil and petroleum products.  USDA released its monthly supply and demand estimates on Friday and increased current year export demand and cut ending stocks estimates.  No changes were made to the estimates for the next crop year and the lower ending stocks estimates were carried forward.  There is less Chinese demand for Soy products due to the lockdowns there although China is starting to lift the lockdowns now.  China has been a major buyer of US Soybeans this year after a very slow start due to the problems in South America.  They are buying for this year and already have booked a large amount of new crop Soybeans to cover future needs.  Most of the current buying is for next year. 

Weekly Chicago Soybeans Futures:

Weekly Chicago Soybean Meal Futures

Rice: Rice was lower again last week on the good progress and condition of the crops shown by USDA in the Monday reports.  Trends are down on the charts.  USDA on Friday cut long-grain export demand by 1.0 million hundredweight and increased ending stocks for this and next year by the same amount.  It made no other changes to the supply or demand estimates for the coming year.  The weekly export sales report showed bad demand last week.  Growing conditions are said to be good.  There are still ideas of less production of US Rice this year but the good conditions are starting to limit loss ideas.  The planting pace is catching up to normal, but emergence remains behind and acreage estimates are still down for the next crop.  Some traders note that it will be difficult to move Rice at current price levels and they are worried about domestic and export demand moving forward. 

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Weekly Chicago Rice Futures

Palm Oil and Vegetable OilsWorld vegetable oils were lower last week.  Palm Oil was the weakest market last week despite ideas of less Malaysian production due to worker shortages from Covid and on the potential for strong exports for the month from Malaysia.  The Indonesian government is now imposing a revised tax scheme on exporters to increase export sales.  Some analysts think Palm Oil is topping out anyway due to reduced demand ideas.  Hopes for better demand from India keep the market supported, but Chinese demand could be less.  A new Covid outbreak is reported in China and cities and infrastructure has been shut down, including some airports and water ports.  The economy could slow down and affect demand.  Production from Malaysia is expected to increase as well as the Covid lockdowns finally go away and as the weather is good for production.  Canola was lower.  The crops are going in the ground and the growing conditions are much improved.   It is reported to be very dry and has been cold for planting but better planting weather is coming now as it is now much warmer.  There are ideas of reduced Sunflower export potential from Russia and Ukraine. The market is worried about South American production as well.  Canada produced a very short crop of Canola last year so supplies are tight. 

Weekly Malaysian Palm Oil Futures

Weekly Chicago Soybean Oil Futures

Weekly Canola Futures:

Cotton: Cotton was higher last week and trends are up again on the charts. USDA made no changes in its monthly supply and demand updates so futures prices were a little lower on Friday. It did trim slightly the world ending stocks estimates for the next crop. USDA reported good export sales again last week. There are forecasts for hot and dry weather to return this week after some showers in West Texas and the rest of the Great Plains over the last couple of weeks and the crop conditions are better than expected after a very hot and dry period in West Texas and the rest of the western Great Plains.  It has also been hot and dry in India and crops grown there are thought to be under stress as well.  The Indian weather is cooler now.  There were ideas that production potential is slipping further due to the previous hot and dry weather in West Texas and the rest of the western Great Plains.  Chinese demand was shown in the weekly export sales report.  Chinese demand could become less due to the Covid lockdowns there be trimming imports due to Covid and has closed a number of cities as the Covid spreads through the nation.  The cities and ports are starting to open up again.

Weekly US Cotton Futures

Frozen Concentrated Orange Juice and CitrusFCOJ was higher last week and trends are still up on the charts.  USDA increased Florida and US production estimates by 1.0 million boxes as Florida Valencia production was increased.  Production overall is still about 11% less than a year ago.  Logistics on imports is once again a problem with a lot of boats stuck off shore in China.  There are concerns that another freeze in Brazil could develop but there is nothing in the forecast for now.  The market is short Oranges and short juice production but is also worried about domestic demand destruction as pills are becoming cheaper again.  The greening disease has taken its toll on the US crop and the previous Brazil crop was down significantly due to drought.  The weather remains generally good for production around the world for the next crop.  Brazil has some rain and conditions are rated good, but it is drier now and some trees are developing stress.  Weather conditions in Florida are rated mostly good for the crops with some showers and warm temperatures. 

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Weekly FCOJ Futures

CoffeeNew York and London were lower last week amid reports of less farm selling from Brazil and less demand for Vietnamese Coffee.  Demand for Coffee overall is thought to be less as the world economic situation changes for the worse.  Temperatures are near to above normal in Brazil and there are no forecasts for frosts or freezes in the short term but the market fears that a freeze could develop.  USDA said that Brazil could produce 64.3 million bags of Coffee this year, significantly higher than last year.  It could produce 41.5 million bags of Arabica and 22.8 million bags of Robusta. 

Weekly New York Arabica Coffee Futures

Weekly London Robusta Coffee Futures

SugarBoth markets were lower last week due mostly to supply concerns.  London White Sugar has been better supported as India has limited exports of White Sugar to 10 million tons for the current marketing year and as Brazil is harvesting its crop of Sugarcane and turning most of it into Ethanol but some Sugar is making it into export channels.  Thailand is still offering and exporting.  Reports from India indicated that conditions are generally good for Sugar production.  The Indian weather service is predicting a normal monsoon season this year.  Support for London also came from ideas of little Sugar coming from Brazil as the mills there are processing for Ethanol and limited European offers in part due to the Ukraine war.

Weekly New York World Raw Sugar Futures

Weekly London White Sugar Futures

CocoaNew York and London were lower last week as supply increases and demand does not.  Reports of big rains in Ivory Coast supported ideas of a big mid crop production but also brought ideas of moldy deliveries to ports.  Ideas are still that good production is expected from West Africa for the year.  The weather is good for harvest activities in West Africa.  Current reports from Ivory Coast indicate that the weather is a good mix of sun and rain so a good midcrop production is expected.  The weather is good in Southeast Asia.  Ghana arrivals have been below year ago levels.    

Weekly New York Cocoa Futures

Weekly London Cocoa Futures

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(Featured image by jdblack 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.