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How Speculative Profit-Taking is Affecting the Prices of Vegetable Oils Futures

World vegetable oils prices were higher last week, but the markets came off the highs late in the week on what was called speculative profit-taking. Palm Oil was higher for the week even with slow exports as reported by the private services. Support still comes from ideas that supply and demand are in balance or supplies are short. India was the major importer as the country reduced import taxes. 

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Wheat: Wheat closed higher last week and trends are up in all three markets. Ideas that the US will have good demand for Wheat as the rest of the northern hemisphere is short production this year. The US and Canada have reduced production this year and so do most exporters around the world. Production is less this year in Russia and internal prices have been strong. Dry weather in southern Russia as well as the northern US Great Plains and Canadian Prairies remains a supportive feature in the market although the weather has become old news. The Russian weather has been good for production in northern and western areas but is still trending dry in southern areas and into Kazakhstan.  Siberian Spring Wheat conditions have been very good. Europe is expecting top yields in some areas but less yield in others and parts of eastern Europe and northern Russia are expecting strong yields. European quality is a problem due to too much rain in some areas and not enough in others. Speculators keep talking about inflation and are buying commodities for an inflation trade. 

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 higher Friday and for the week on strong weekly export sales and strong ethanol demand as future demand ideas ignored some world economic and regulatory issues emanating from China. Trends are mixed on the daily charts for both markets. Traders keep talking about new demand for the market from exporters and noted that the demand for ethanol production was very strong. Demand will be an increasing feature in the trade moving forward as the harvest moves to its halfway point. Initial yield reports have been mixed but good, with some lower yields reported due to disease but some higher than expected yields reported in western areas. Farmers are reported to be limited sellers at best. Most of the elevators along the Mississippi are exporting again which is good news for nearby demand. There are a lot of ideas that production and planted and harvested area will be significantly less next year due to the lack of fertilizers available and the cost of production. The Oats market knows that supplies will be tight due to a drought in the northern Great Plains and Canada. There will not be much in the way of high-quality Oats for consumers to buy in the coming year. 

Weekly Corn Futures

Weekly Oats Futures

Soybeans and Soybean Meal: Soybeans and the products closed higher last week despite weakness in Soybeans and Soybean Oil over the second half of the week.  Soybean Oil showed weakness along with Palm Oil on ideas that both markets were overbought, but the weakness was not enough to push prices lower for the week. Ideas of strong demand from China were supportive but took a back seat to ideas of a new economic and regulatory issue there.  There were no new sales announcements to China last week. The weekly charts still show downtrends for all three markets, and the daily chart trends are mixed. Harvest has moved past the halfway point for Soybeans and a harvest low might be seen during the second half of the harvest. Reports indicate that farmers are limited sellers at best.  Gulf port elevators are coming on line and export sales and exports are increasing. 

Weekly Chicago Soybeans Futures:

Weekly Chicago Soybean Meal Futures

Rice: Rice was lower last week on what appeared to be speculative selling. Short-term downtrends on the charts got started. Ideas are that demand is not yet strong enough to take up the supply available to the market. The crop has been largely harvested in Texas and in Louisiana. Mississippi and Arkansas producers are also almost done with the harvest. Yield reports and quality reports have been acceptable to many in Texas and are called good in Louisiana. The reports have been good in both Arkansas and Mississippi

Weekly Chicago Rice Futures

Palm Oil and Vegetable Oils: World vegetable oils prices were higher last week, but the markets came off the highs late in the week on what was called speculative profit-taking. Palm Oil was higher for the week even with slow exports as reported by the private services. Support still comes from ideas that supply and demand are in balance or supplies are short. India was the major importer as the country reduced import taxes. It has also reduced import taxes now for Soybean Oil and Canola Oil and this has caused some demand worries for Palm. The weekly chart trends are up. There are ideas of tight supplies due to labor problems. There are just not enough workers in the fields due to Coronavirus restrictions. Production has also been down to more than offset the export losses so prices have trended higher.  Canola closed higher for the week as the harvest is continuing amid good conditions in the Prairies. Farmers are bullish and reluctant to sell and would rather work in the fields. The weekly chart trends are sideways. Production ideas are down due to the extreme weather seen in these areas. It remains generally dry and warm in the Prairies. The Prairies crops are in big trouble now due to previous hot and dry weather. 

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Weekly Malaysian Palm Oil Futures

Weekly Chicago Soybean Oil Futures

Weekly Canola Futures:

Cotton: Futures were higher after a week of choppy trading. Ideas of weakening demand due to weaker world economies hurt the futures market but demand has been very good in the world market. The weekly export sales report was strong. Futures in Crude Oil were also higher and the US Dollar worked lower. Demand for US Cotton remains very strong and that is good news for sellers as the strong demand implies strong prices should continue. The demand is expected to be strong from Asian countries as world economies recover from Covid lockdowns.  Analysts say the demand is still very strong and likely to hold at high levels for the future. Good US production is expected, but there are some questions about the overall production in Texas. There are ideas of less production from India due to recent adverse weather in Cotton areas there. Chinese Cotton areas have had too much rain as well, and Chinese demand is also strong as clothes makers use foreign Cotton to get away from domestic supplies that might have been produced by forced labor and might not be allowed in the US or other western countries

Weekly US Cotton Futures

Frozen Concentrated Orange Juice and Citrus: FCOJ was higher last week and chart trends are starting to turn up. The hurricane season has passed its peak and the chances for a damaging storm to hit the state of Florida are dropping by the day.  The weather remains generally good for production around the world. Brazil has some rain is in the forecast and flowering will be possible in the next couple of weeks.  Weather conditions in Florida are rated mostly good for the crops with scattered showers and near-normal temperatures. Mexican crop conditions in central and southern areas are called good with rains. Northern and western Mexico is rated in good condition. Florida is in the latter stages of the hurricane season but the storms have missed the state so far and crop conditions are good. 

Weekly FCOJ Futures

Coffee: New York closed lower Friday but London closed higher as some major storms are likely to hit Vietnamese Coffee areas through the end of next week. Trends are mixed in both markets. The lack of Coffee and freight to move the Coffee that is available is still supporting futures. New York and London are both having trouble sourcing Coffee from any country due to a shortage of containers to carry the Coffee out of the origin country. Scattered showers are still in the forecast for Brazil and some flowering is expected. Scattered showers are now in the forecast for Southeast Asia and big rains are possible in Vietnam from a tropical system over the course of the next week. Some big rains are likely this weekend as well so some flooding is possible. No big winds are expected so the Coffee should not fall from the trees that much. Good conditions are reported in northern South America with above-average rains and good conditions are reported in Central America with near-average rains. Conditions are reported to be generally good in parts of Africa.

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Weekly New York Arabica Coffee Futures

Weekly London Robusta Coffee Futures

Sugar: New York and London were a little lower last week and trends are turning down on the charts for both markets.  Supplies of White Sugar are a little tight right now for the demand but the Sugar appears to be out there. Renewed talk of inflation coming to all commodities markets also supported the markets. New York closed a little lower on improved weather conditions for the net Sugarcane crop in Brazil. Trends are down on the daily charts in both markets and speculators are reported to be selling.  Ideas are that the supplies available to the cash market are rather slim and that demand is increasing for both White and Raw Sugar. The reduced production potential from Brazil is still impacting the market. India is not offering as world prices are well below domestic prices and has had some weather problems of its own. Consumption of Sugar is said to be improving from previous low levels but still remains rather low. Thailand is expecting improved production. It is raining in southern Brazil which will be good for the next crops there.      

Weekly New York World Raw Sugar Futures

Weekly London White Sugar Futures

Cocoa: New York and London closed higher on Friday in recovery trading but lower for the week. Ideas of short West African production for the coming year are still providing the best support but ideas that demand will only improve slightly kept futures from making any rally attempt. Both Ivory Coast and Ghana are reporting improved weather as it is now mostly sunny with some scattered showers around. World economies are starting to reopen after Covid and the open economies are giving demand the boost. 

Weekly New York Cocoa Futures

Weekly London Cocoa Futures

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(Featured image by stevepb 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.