Sugar production in India and Thailand is expected to improve

Latest news in the agriculture market: Charts show that sugar prices broke through support areas to keep overall trends down.

Wheat

US markets were mixed as the trade started to hear harvest results from the Hard Red Winter areas and assess the overall damage. The harvest has been active in Texas and is now moving north into Oklahoma. It is expected to start in Kansas in another week to ten days. Initial results have shown weak yields. Yields have ranged anywhere from 25 to 35 bushels per acre, and this is below expectations expressed previously by farmers and implied by the USDA production estimates last month. USDA should cut production estimates for Hard Red Winter areas this week in its next round of production estimates. Protein levels are also down and appear to be averaging about 10.4%, so millers will have to blend this Wheat with higher quality Wheat to make bread. The need for higher protein Wheat has helped support Minneapolis Spring Wheat futures in the past week. Minneapolis has also been supported by bad growing conditions in spring wheat areas of the northern Great Plains and the Canadian Prairies. It is dry in the Dakotas and the Prairies have seen too much rain.

Planting has been delayed in Canada and the crop condition ratings in the US are lower than expected by the trade. These conditions and ratings are creating concern about the potential for a smaller crop even as demand expectations increase due to the lower Winter Wheat quality and yields. Soft Red Winter areas are still wet and cold, but the weather is finally turning in the Midwest so the crop should now start to mature. The Midwest has seen plenty of rain, so a lower quality crop is expected, although yields, in general, could be strong. Lower supply expectations will help support Winter Wheat futures but the lower quality will hurt the overall demand profile. The export market will remain difficult as there is still a lot of Whe3at around. Russia is cutting back production expectations a bit and there are questions about Ukraine and Europe Wheat production, but Australia has a very good crop and Argentina is talking about a very good crop as well. US prices will probably move to the higher end of the world price range after the harvest is complete later this Summer. The weekly charts show the potential for Winter Wheat prices to move higher over time. Minneapolis weekly charts have shown strong price action but now are against some key resistance areas.

Weekly Chicago Soft Red Winter Wheat Futures © Jack Scoville

Weekly Chicago Hard Red Winter Wheat Futures © Jack Scoville

Weekly Minneapolis Hard Red Spring Wheat Futures © Jack Scoville

Corn

Corn was little changed and oats were higher last week. Oats prices collapsed on Friday and the uptrend is now in question. The upside targets got hit before the collapse, and prices are now back against a very steep uptrend line. The week will be an important one for oats price direction. Corn continues to hold support on the charts and the trade is increasingly taking notice. It looks like the downside is limited for now or until more is known about crop production potential. The weekly charts show the potential for the market to move higher over time. The export sales report was weaker last week and a disappointment to the trade. Domestic demand remains strong in ethanol as ethanol production levels remain high. Ethanol demand could remain strong as OPEC has moved to keep production down and prices somewhat higher. Growing conditions are getting better now after the very wet Spring. It was drier and warmer in the Corn Belt and these conditions are expected to continue this week. Southern growing areas were also drier. USDA will issue its next round of monthly supply and demand updates this week, but little change is expected as the quarterly stocks report will be released at the end of the month to provide USDAS with more information about overall supplies.

Weekly Corn Futures © Jack Scoville

Weekly Oats Futures © Jack Scoville

Soybeans and soybean meal

Soybeans and soybean meal were both lower last week and made new weekly and monthly lows on the charts. It was a weak performance and one dictated by the threat of South American selling and the potential for even more Soybeans to be planted due to the tough planting conditions for corn. The weather has improved in the Midwest. It was warmer and drier than expected over the weekend and the more dry weather is likely this week. Farmers are now actively planting the last of the crop. Brazil producers remain very reluctant sellers and both Brazilian and Argentine producers are unhappy with the strength of their currencies against the US Dollar as they earn less in local terms for exported soybeans and products. The currencies were higher late last week as the US Dollar moved lower again due to some weak US economic data. Demand for US soybeans and products could remain strong as the US Dollar remains weak in world markets. There could be lower prices this fall if the US doe, in fact, produce a huge crop. South American producers will be forced to sell more sooner or later, and appear to be hoping for some weather problems in the US to cause higher prices.

Weekly Chicago Soybeans Futures © Jack Scoville

Weekly Chicago Soybean Meal Futures © Jack Scoville

Rice

Rice closed higher on follow through buying from the big rally of the previous couple of weeks. The potential for big production problems in US rice growing areas continues to support the move higher. The market also got a boost from news that Iraq had finally bought 30,000 tons of US milled long grain rice. It was the first sale to that country for the current crop year, and it is hoped that more sales are coming. Most of the weather problems are in the Delta. California has had trouble planting the crop in a timely way due to previous rains and snows in the state. All areas are seeing warmer and drier weather now, and fields are drying out. Conditions are reported to be good in Texas and Louisiana, and the crop is in flood in many areas. Arkansas remains a big problem area as little work is able to get done. The soils are still too wet and producers have been sidelined for a couple of weeks in northeastern parts of the state. California is also having problems as planting is very late due to bad weather this year. USDA showed reduced planted area in its new crop estimates, but a very high yield that could be overestimated. The trade expects USDA to cut yield estimates in its reports this week. It could also increase overall demand as many think that the domestic demand is being underestimated. The weekly charts show that the rally could move higher over time, with final targets near 1275 basis the nearest futures contract possible.

Weekly Chicago Rice Futures © Jack Scoville

Palm oil and vegetable oils

World vegetable oils markets were lower last week and price trends are down on the weekly charts. In fact, the weekly charts for the various vegetable oils markets are probably about the weakest of all agricultural futures markets. Palm oil was the strongest market as export demand was higher against improving production ideas. The daily palm oil charts show the chance for a rally, but trends remain down on the weekly charts. Both of the private surveyors estimated Malaysian palm oil exports above 1.3 million tons for May. This is about a 15% improvement on the export pace of a month ago. A lot of the demand is thought to be related to buying ahead of Ramadan, so the export pace could fade again in the next few weeks as this festival comes to an end. Reports from the interiors of both countries suggest that trees have seen plenty of rain and production should be seasonally increasing. Canola remains relatively strong amid tight Canadian market conditions, but trends are now down due to weaker prices in the US and around the world for competing oilseeds. Producers in Canada are unwilling sellers due to cold and wet weather in the Prairies that has kept field work to a minimum in many areas. Planting is now about done and the crops are emerging and growing. Demand from both the processor side and the export side has been strong enough to generally support the market. Soybean Oil was lower and chart trends are down.

Weekly Malaysian Palm Oil Futures © Jack Scoville

Weekly Chicago Soybean Oil Futures © Jack Scoville

Weekly Canola Futures © Jack Scoville

Cotton

Futures held in a range trade last week. It looks like the rally is over and that the short mills position in the on call market has been factored into prices. However, ideas are that the mills still have to buy some July futures contracts, and these ideas are expected to support the July contract for the next couple of weeks. The weekly charts now show mixed trends. Supplies available to the market are still increasing. Certified stocks levels have been increasing for the last couple of weeks and are now well over 400,000 bales. Export demand remains solid and was considered strong last week for both current crop and next crop demand. Planting progress was good last week and should be good this week as the weather is expected to be drier. Crop condition should also be improving due to the warmer and drier weather. USDA will issue its next round if supply and demand reports this week, and few overall changes are expected in the Cotton data.

Weekly US Cotton Futures © Jack Scoville

Frozen concentrated orange juice and citrus

FCOJ closed lower last week and lower on Friday as the Florida weather looked to show some improvement. Rains were in the forecast for the weekend, and these rains were very beneficial as the state had been in a drought. There are no systems in the Atlantic to cause concern about tropical storm development that could be detrimental to trees and fruit. NOAA released its hurricane outlook for the Atlantic a week ago. The Outlook calls for an above normal season, with more storms and more named storms in the general trend. It makes no predictions on if or haw many storms could make landfall, the trend to an able normal season implies that chances for a landfalling hurricane are enhanced. The hurricane season starts this week with the beginning of June. Trends remain mostly down on the charts, and so far there has been very little buying interest. The demand side remains weak and there are plenty of supplies in the US. Brazil has been exporting FCOJ to the US to cover the short Florida crop. Not even a very small Florida crop has been able to create much of a sustained rally in futures due in part to the weak demand and in part due to the increased imports from Brazil. Domestic production remains very low due to the greening disease and drought. Trees now are showing the fruit of varying sizes and overall conditions are called good because of the irrigation. The Valencia harvest is moving to processors and into the fresh market and is almost over. Brazil crops remain in mostly good condition.

Weekly FCOJ Futures © Jack Scoville

Coffee

Futures were lower last week, and New York made new lows for the move. The changes in the relationship between the Real and the US Dollar dictated almost all of the price action. Mostly it was the US Dollar moving lower that helped provide some support. The market action remains weaker overall due to ideas of good supplies and reports of weak demand. The cash market remains very slow. Offers remain in the cash market, and differentials are stable. Buyers remain quiet and appear ready to use already contracted supplies. New York has featured some buying support from commercials as they fix prices for differentials purchases, and speculators have become more two-sided in trading the market as the Winter season is approaching in Brazil. However, speculators and commercials are still mostly bearish. London had been more stable as overall market supplies remain relatively tight. Offers are less and seen at high prices from Robusta countries such as Vietnam. Indonesia and Brazil are also very low on supplies. The Robusta market is still relatively strong compared to Arabica and due to the short supplies available to the market as it works to curb demand through the higher prices.

Weekly New York Arabica Coffee Futures © Jack Scoville

Weekly London Robusta Coffee Futures © Jack Scoville

Sugar

It was a lower week in New York and London, and charts show that prices broke through support areas to keep overall trends down. It is the threat of increased supplies to the market that has pressured prices in the last few weeks. Production conditions have been better this year in Brazil, and a better harvest is anticipated in the next couple of months despite the weak start as demonstrated in the initial UNICA data a couple of weeks ago. Ideas are that Unica will show an increased crush pace in its data this week as arrivals of cane to mills should have increased. Production in India and Thailand is expected to improve in the coming year. The Indian weather service estimates that the monsoon will be within the normal range. Monsoon rains are now moving into the country. Thailand also hopes for an improved monsoon season this year. China is still importing significantly less sugar so far this year. The weather in Latin American countries away from Brazil appears to be mostly good. Northeast Brazil remains too dry but has seen some light precipitation lately. Center South areas have had plenty of rain. Most of Southeast Asia has had good rains. The ISO increased its sugar surplus estimate for the coming year to 3.0 million tons after a deficit production estimate for the current year.

Weekly New York World Raw Sugar Futures © Jack Scoville

Weekly London White Sugar Futures © Jack Scoville

Cocoa

Futures markets were sharply lower last week and gave back the gains from the recent rally attempt. Both markets are now testing back into the low area that the markets left just a few weeks ago. The overall market situation remains generally bearish, although fundamentals could change in the longer term. Harvest activities in West Africa are completed. The demand from Europe is reported weak overall, and the North American demand has been weaker. The next production cycle still appears to be big on the growing conditions around the world are generally very good. West Africa has seen much better rains this year and now getting warm and dry weather. Growing conditions are good. East African conditions are now called good. Good conditions are still being reported in Southeast Asia. The ICCO last week estimated West African production at 1.78 million tons. It said production would be 382,000 tons above demand, an increase from previous estimates.

Weekly New York Cocoa Futures © Jack Scoville

Weekly London Cocoa Futures © Jack Scoville

Dairy and meat

Dairy markets were lower last week, but longer term trends remain up. It looks like dairy prices are now in a correction mode. Supplies are strong seasonally in all areas of the US. Demand is good for cream, and cheese makers are displaying increasing demand. Cream demand for butter has been very good as orders for print butter have increased. However, butter inventories in cold storage are increasing in some areas. Demand for Ice Cream has been mixed depending on the region. Cheese demand appears to be getting stronger due to promotions on the retail level. Exports are reported to be stronger. Dried products prices are generally weaker. World prices have been firming in the last month on reduced Oceana production and steady to firm demand prospects, mostly from Asia.

US cattle and beef prices were higher. The beef market has been strong, and packers paid higher prices for cattle last week. Feedlots are very current with supplies and are pulling cattle ahead in order to take advantage of the high prices. The trade is worried about a trend change to down given that the market has been very strong, but the cash market keeps holding and demand is also holding. April went off the Board on Friday and now June is too cheap when compared to cash prices. That implies that the market will need to rally again this week or that cash will continue to fall.

Pork markets and Lean Hogs futures were firm on ideas that cash market values had bottomed recently. Cash markets have had a firm tone inside the US despite strong hog availability. Pork demand remains stronger than expected, but packers have been pulling back from the market as they sense increasing supplies are coming. Packer demand has been very good until now. There are big supplies out there for any demand. The charts show that the market could work lower.

Weekly Chicago Class 3 Milk Futures © Jack Scoville

Weekly Chicago Cheese Futures © Jack Scoville

Weekly Chicago Butter Futures © Jack Scoville

Weekly Chicago Live Cattle Futures © Jack Scoville

Weekly Feeder Cattle Futures © Jack Scoville

Weekly Chicago Lean Hog Futures © Jack Scoville

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DISCLAIMER: This article expresses my own ideas and opinions. Any information I have shared are from sources that I believe to be reliable and accurate. I did not receive any financial compensation in writing this post, nor do I own any shares in any company I’ve mentioned. I encourage any reader to do their own diligent research first before making any investment decisions.