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The sugar industry is reeling due to the impact of coronavirus lockdowns

Ideas are that there is plenty of sugar for the world market, but getting the sugar moved is becoming more difficult with the widespread Coronavirus outbreak in both Brazil and India. Brazil mills have shifted part of the crush to Sugar production due to less ethanol demand. New York closed slightly lower and London closed a little higher but rejected new moves to lower prices in the past week.

Jack Scoville

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Wheat

Winter Wheat markets were slightly lower at the close last week as the Winter Wheat harvest expanded north and started to get complete. Spring Wheat was developing under good growing conditions and futures prices closed lower. Yield reports from the central and southern Great Plains have been variable, but generally a little better than expected. Soft Red Winter yields are expected to be high. The Winter Wheat markets are in up trends on the weekly charts. Spring Wheat markets show down trends as good conditions are also reported in much of Canada. It remains dry in the western sections of the Great Plains but this will aid harvest progress now. It is still dry in France and Russia. Australia remains in good condition and is getting beneficial rains.

Weekly Chicago Soft Red Winter Wheat Futures
Weekly Chicago Hard Red Winter Wheat Futures
Weekly Minneapolis Hard Red Spring Wheat Futures

Corn

Corn was lower but closed near the weekly highs. It is still a weather market. Rains fell in many of the drier areas of the Midwest last week and greatly benefited the crops. It was hot and dry over the weekend and it should remain generally hot for parts of this week. Some of the forecasts call for rains to continue to fall and support crops while others call for less. The ability of futures to hold rallies will depend on how much heat and for how long it stays dry in the Midwest. There have also been problems with demand. Meats processors are back and are close to capacity. The backlog of Cattle and Hogs will slowly disappear under this scenario and meat wholesale and retail prices are stable or falling. Ethanol demand is also improving as lockdown orders are lifter in most states and in Europe. Demand for gasoline and ethanol has gotten a little stronger and should continue to improve over time. Recent reverses by some states on opening orders are hurting demand ideas for ethanol. US prices are high in the world market so export sales are expected to be less.

Weekly Corn Futures
 Weekly Oats Futures

Soybeans and Soybean Meal

Soybeans were a little higher on better Chinese demand and on the US weather. China has become a much more active buyer of Soybeans here in the US and has promised to ramp up purchases in order to comply with commitments it made under the Phase One trade deal. China has remained a very active buyer in South America even as it has increased Soybeans buying here in the US, so the overall amount taken from the US might not match the hopes of the trade. Brazil prices have been creeping higher for the rest of the world as it starts to run out of Soybeans to export, so China and the rest of the world will look to the US and Argentina for additional supplies. The US weather is considered good for growing Soybeans at this time but forecasts call for hot and dry weather in the next few days. Many Soybeans appear short in the central Midwest right now. Ideas are that USDA will show slight improvement in crop conditions this week after rains hit much of the belt last week.

Weekly Chicago Soybeans Futures
Weekly Chicago Soybean Meal FutureS

Rice

Rice was lower as harvest comes closer. New crop prospects appear solid for increased production in the coming year. The area is larger and the growing conditions are mostly good. The combination of good export buying in general and the buying inside the US due to the Coronavirus has made the market short old crop Rice. There are ideas that the mills are well covered into new crop, but little Rice is available from producers. The crops that got planted are in very good condition in the south and near the Gulf Coast and are called in good condition now in Mississippi, Arkansas, and Missouri. Early harvest activities are reported in Texas and southern Louisiana.

Weekly Chicago Rice Futures

Palm Oil and Vegetable Oils

World vegetable oils markets were higher last week. Palm Oil closed higher after news of renewed demand interest from India and China and on reports of less production from Malaysia. Higher world petroleum prices helped with ideas of increased biofuels demand  Palm Oil has been hoping for better demand from importers as world economies slowly open after being closed by the Coronavirus epidemic. Indonesia continues to focus its Palm Oil on internal demand for biofuels. Soybean Oil and Canola were higher. Soybean Oil found support on increased demand ideas partly fueled by higher world petroleum prices.  Canola fell initially on improved growing conditions in the Canadian Prairies, but recovered with Chicago and Malaysia. Canola has found support from the weaker Canadian Dollar and ideas that not all areas were in good shape. The weather has been warmer the past couple of weeks and most areas have seen rain.

Weekly Malaysian Palm Oil Futures
Weekly Chicago Soybean Oil Futures
Weekly Canola Futures

Cotton

Cotton closed drifted lower on demand concerns as bad growing conditions continued in West Texas. The world is starting to slowly recover from the Coronavirus scare and some stores are starting to open again after being closed for weeks. However, economic improvement in the US was thrown into doubt as Coronavirus cases surged higher in states that had reopened.  The retail demand has been slow to develop as many consumers got hurt economically due to stay at home orders during the height of the pandemic and have little disposable funds to spend on clothes.  Demand will slowly improve but the industry should have plenty of supplies to work within the short term.  The US weather situation is mixed, with good rains noted in the Southeast and good conditions in the Midsouth. However, it has been very hot and dry in West Texas, and crops there are suffering.

Weekly US Cotton Futures

Frozen Concentrated Orange Juice and Citrus

FCOJ was sharply higher on Friday, but a little lower for the week. The trade was trying to reject the start of a new leg lower set Thursday. The fundamentals remain mostly positive for prices. Florida production is now estimated at 67 million boxes, unchanged from last month. California and US production was increased. Support is coming from the continued effects from the Coronavirus that are keeping people at home and drinking Orange Juice. Demand from grocery stores has remained strong in response to increased consumer demand. Inventories in cold storage remain solid so there will be FCOJ to meet the demand, but inventories are creeping lower. There is increasing concern about the foodservice demand not improving even with the partial opening of the states. The weather in Florida is currently good for the crops. The tree condition is called good. Brazil has been dry and irrigation has been used. The harvest is active in Brazil.

Weekly FCOJ Futures

Coffee

Futures were sideways in both markets for much of the week but turned higher on Friday. Chart trends have turned up for at least the short term with the price action on Friday. London Robusta futures have been the leader to the upside. Demand overall remains down with the US still locking down due to the Coronavirus resurgence in some states. The demand from coffee shops and other foodservice operations is still at very low levels. Consumers are still drinking coffee at home and the return of the Coronavirus outbreak will keep things that way. Europe is emerging from lockdowns. The Brazil harvest is active but shipping and collection have become very difficult due to the widespread outbreak of the Coronavirus there. Even so, the pickers are showing up for work and ports are operating normally. Ideas are that production will be very strong this year as it is the on year for the trees. The strong production ideas are coming despite hot and dry weather seen in the country at flowering time. Vietnam also had hot and dry weather at flowering time and production ideas there are less than original expectations of a bumper crop.

Weekly New York Arabica Coffee Futures
Weekly London Robusta Coffee Futures

Sugar

New York closed slightly lower and London closed a little higher but rejected new moves to lower prices in the past week. Ideas are that there is plenty of Sugar for the world market, but getting the Sugar moved is becoming more difficult with the widespread Coronavirus outbreak in both Brazil and India. Brazil mills have shifted part of the crush to Sugar production due to less ethanol demand. India is thought to have a very big crop of Sugarcane this year but getting it into Sugar and into export position has become extremely difficult due to Coronavirus lockdowns.  Thailand might also have less this year due to reduced planted area and erratic rains during the monsoon season. There are reduced flows from rivers from China as well.

Weekly New York World Raw Sugar Futures
Weekly London White Sugar Futures

Cocoa

New York and London closed lower on weaker demand ideas. The European grind was down almost 9% and the North American grind was lower as well/ There are a lot of demand worries as the Coronavirus is not going away and could be making a comeback in the US. Europe is still trying to open its markets again. Harvest is now over for the main crop in West Africa and the results are very good. The reports from West Africa imply that a big harvest in the region. Arrivals are on a pace about the same as last year. Ideas are that Southeast Asia also has good crops.

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.