The Reduced Sugar Production Potential from Brazil is still Impacting the Market

Wheat: Wheat closed mixed last week, with Winter Wheat markets lower and Minneapolis Spring Wheat contracts a little higher. Trends are now sideways in all three markets. Speculators were the best sellers last week on more news that a new Covid variant has been discovered in Africa. Reports indicate that the virus spreads rapidly but produces mild symptoms and this news caused buying yesterday. European nations were also starting to lock down again as the virus resurges there. Demand ideas got hurt over the last several days. Ideas have been that the US will have good demand for Wheat as the rest of the northern hemisphere is short production this year but so far demand has been average against previous years.  Offer volumes are down from both Russia and Europe. Dry weather in southern Russia as well as the northern US Great Plains and Canadian Prairies caused a lot less production and are still supporting the market. The lack of production has reduced the offers and Russia plans to announce sales quotas for next year very soon. Russia has already increased export taxes to control the flow of export Wheat out of the country. Australia has had too much rain and the crop quality has been much diminished. These international moves should increase demand for US Wheat but this has not really happened yet. 

Weekly Chicago Soft Red Winter Wheat Futures 

Weekly Chicago Hard Red Winter Wheat Futures

Weekly Minneapolis Hard Red Spring Wheat Futures

Corn: Corn closed near unchanged in recovery trading and trends are now mixed on the daily charts. Futures had been much weaker to start the week. The recent down trends were caused by Coronavirus fears as parts of Europe are locking down due to a resurgence of the virus and as a new variant was reported in Africa. The weekly charts still suggest higher prices are coming longer term and the fundamentals do as well. Corn has relatively tight supplies as farmers are mostly done harvesting and not selling. Demand will be an increasing feature in the trade moving forward as the harvest moves to completion sometime this month. Demand has been good so far this season but a lot of business has gone to Ukraine this Fall. That is expected to change over the Winter as Ukraine exportable supplies start to run low. Interior basis levels are reported to be strong due to strong 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.

Weekly Corn Futures

 Weekly Oats Futures

Soybeans and Soybean Meal: Soybeans and Soybean Meal closed higher last week in recovery trading and the trends are now mixed. Soybean Oil closed lower last week on weakness in competing oils and Crue Oil. The recent down trends were primarily caused by Coronavirus fears that have returned to the market.  Soybean Oil was lower on lower Crude Oil futures and on-demand concerns due to the potential for closings to return due to a resurgence of the Coronavirus.  Soybean Meal was higher as demand is expected to get strong again and as less Soybean Oil might be produced.  Harvest is about over for Soybeans and a harvest low might have been hit this week. Reports indicate that farmers are limited sellers at best.  Planting and initial crop development is going very well in Brazil but it has turned dry in southern Brazil and Argentina and some weather-related support is coming to the futures market.  Brazil could have soybeans ready for export by the end of February and the crop potential is up to 150 million tons. 

Weekly Chicago Soybeans Futures:

Weekly Chicago Soybean Meal Futures

Rice: Rice was lower yesterday from the selling caused by the reports of the new variant of the Covid found in Africa.  The variant is supposed to spread rapidly but be mild in its effects. A return of the Coronavirus to Europe and the discovery of a new variant in Africa gave the market some big problems to work though and speculators have apparently decided to reduce risk in the last week. Futures have held some important support areas on the daily and weekly charts and are trying to move higher again. Many producers are done harvesting and are hunting and not interested in selling at a time that is traditionally the cheapest prices of the year.  The cash market is reported to be relatively strong. The crop has been largely harvested in all states. 

Weekly Chicago Rice Futures

Palm Oil and Vegetable Oils:  Palm Oil was lower last week on speculative selling in risk-off trading. Improved export demand is reported but still faces headwinds due to the worldwide Covid outbreak along with worries about demand.  Futures are now at the lower end of the range. Reports of new lockdowns in Europe and a new variant of the Coronavirus discovered n Africa hurt demand ideas on Friday and caused speculative selling to reduce risk. Support still comes from ideas that supply and demand are in balance or supplies are short. 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 was lower last week along with price action in Chicago Soybean Oil and on the Coronavirus news and its potential effects on demand. Farmers are bullish and reluctant to sell because of the sharp reduction in Canola production in Canada this year. However, competing oils are down hard and Canola needed to fall as well.   

Weekly Malaysian Palm Oil Futures

Weekly Chicago Soybean Oil Futures

Weekly Canola Futures:

Cotton: Cotton futures closed lower last week on demand concerns caused by the return of Coronavirus in Europe and the discovery of a new variant in Africa. The variant is expected to spread quickly but produce mild reactions. Chart patterns are bearish to add to the selling pressure. The move came despite a strong weekly export sales report.  Demand has fallen off with the rally in the US Dollar but US prices are reported to be still well below those in China so strong demand is expected to continue, at least from that destination. News on Friday of lockdowns in Europe along with the discovery of a new variant in Africa hurt demand ideas and caused new selling. Trends are starting to turn down on the weaker demand ideas. Analysts say the Asian demand is still very strong and likely hold at high levels for the future.  US consumer demand has been very strong as well despite higher prices and inflation. Good US production is expected. 

Weekly US Cotton Futures

Frozen Concentrated Orange Juice and Citrus: FCOJ was a little lower last week and trends are still mostly down. First swing targets were hit on Wednesday for the down move and the market has held those levels since then. Demand ideas were hurt here and around the world by the return of Covid induced lockdowns in Europe and the discovery of a new Covid variation in Africa. The hurricane season is over and the chances for a damaging storm to hit the state of Florida are gone so speculators have gotten out of longs and got short. The weather remains generally good for production around the world. Brazil has some rain with more in the forecast and flowering is likely. Brazil production was down last year due to dry conditions at flowering time and then a freeze just before harvest.  Weather conditions in Florida are rated mostly good for the crops with a couple of 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. 

Weekly FCOJ Futures

Coffee: New York and London closed higher on Friday and higher for the week on the logistical and production problems in Brazil and Vietnam. The lack of Coffee available to deliver against contracts remains a factor. Containers are not available in Vietnam or in Brazil to ship the Coffee. Covid has also returned to Vietnam and now the rest of the world and could be a factor in interrupting shipments. Brazil also has limited amounts of Coffee available after bad weather at flowering time and then a freeze before the harvest got underway. Production conditions for the next crop in Brazil are called good. Scattered to isolated showers are now in the forecast for Southeast Asia and for Vietnam. 

Weekly New York Arabica Coffee Futures

Weekly London Robusta Coffee Futures

Sugar: New York and London closed lower last week on speculative selling. Weaker demand ideas were caused by reports of new lockdowns in Europe as the Covid returns there and reports of a new variant discovered in Africa. The daily charts show that trends are down. Reports indicate that consumer demand has returned to the market but not in a big way. Ideas are that the supplies are out there but it will take a stronger price to get them into the market. Ideas are that Indian producers and exporters are willing sellers above 20.50 cents. Processors in Brazil are refining the cane for Ethanol more than Sugar right now and this trend is expected to continue due to the relative price spreads. The reduced production potential from Brazil for the current harvest is still impacting the market as cane production suffered last season. India is not offering as world prices are still below domestic prices. 

Weekly New York World Raw Sugar Futures

Weekly London White Sugar Futures

Cocoa: New York and London closed higher on Friday but lower for the week. The down move showed signs of exhaustion late last week. The return of the Coronavirus in Europe as well as the new variant found in Africa were the primary reasons to sell but are mostly part of the price now. Much of the selling came on ideas of weaker demand caused by the reports.  Ideas are that demand will only improve slightly if at all and production in West Africa appears to be good this year.  Both Ivory Coast and Ghana are reporting improved weather as it is now mostly sunny with some scattered showers around. 

Weekly New York Cocoa Futures

Weekly London Cocoa Futures

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(Featured image by pasja1000 via Pixabay)

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