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The World Sugar Market Is Expected To Be in a Big Surplus Production Next Year

New York and London sugar futures closed lower last week, and trends are still mixed in both markets although the charts do indicate that additional price weakness is possible in the coming days. It looks like the futures are starting to anticipate an increase in supplies available to the market and offers should increase more from Brazil and India.

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Wheat: Wheat markets were a little lower in Chicago last week, but held firm in Minneapolis as the US Dollar moved significantly lower. Reports of weaker Black Sea prices continue as Russia and Ukraine look for new business for their crops and that news hurt the Chicago Winter Wheat markets. The news kept Russian and other world Wheat values on the weaker trend. The weekly charts for all three markets show sideways trends but demand fundamentals remain bearish. A cut in demand and an increase in ending stocks was seen in the reports last week but the increase in ending stocks was only 10 million bushels and smaller than expected. The reduced pace of export sales for the US were bearish. The demand for US Wheat still needs to show up and right now there is no demand news to help support futures. 

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 and Oats closed lower last week, with Corn finding support on speculative short covering and a weaker US Dollar. The Dollar lost about one cent on Wednesday and was about unchanged on Friday. Weak demand overall for US Corn remains a big problem for the market and USDA was expected to cut demand and raise ending stocks in its coming WASDE reports. The Mississippi river remains low due to the dry conditions seen in most of the central parts of the US. Barge traffic has been reduced.  Some water has been falling in the basin now in the form of rain and snow so conditions should be improving but the improvement, for now, appears to be short-term. The cash market has been strong at the Gulf but weak in the Midwest river areas due to the low river levels. Other interior basis levels have been strong due to a lack of farm selling. There are increasing concerns about demand with the Chinese economic problems caused by the lockdowns creating the possibility of less demand as South America has much better crops this year to compete with the US for sales. South American prices are currently cheaper than those in the US. Export demand in general has been slow so far this year. 

Weekly Corn Futures

Weekly Oats Futures

Soybeans and Soybean MealSoybeans and Soybean Oil closed higher last week, but Soybean Meal was a little lower as the US Dollar Index lost one cent in trading last Wednesday and traded near unchanged on Friday.  Ideas that Chinese demand will stay weak overall and that Brazil growing conditions are good and getting better.  Export demand for the US is improved with the strong sales from last week. Domestic demand should be strong for Soybeans as the crush spreads got richer and provided crushers with a big profit margin for their crushing   Export demand has suffered due to the lack of good buying by China, but China has been a better buyer in the last couple of weeks.  South America as a whole is expected to produce a very big crop later this year for harvest next Spring as the weather outlook is positive for crops.  However, a third year of La Nina as predicted by meteorologists could cut the production potential. Production potential is already being hurt in Argentina. Ideas are that Brazil is off to a very good start. The Mississippi river is low due to the dry conditions seen in most of the central parts of the US but some rain fell in the basin last week and river levels should work a little higher.  Barge traffic has been reduced but could increase with the improved river flows. US production ideas remain strong after mostly good weather in August. 

Weekly Chicago Soybeans Futures:

Weekly Chicago Soybean Meal Futures

Rice:  Rice was higher last week and trends are now up on the daily and weekly charts.  Prices finally moved above strong resistance above 1800 on both sets of charts.  Some new Rice producer selling might be found soon as futures and basis are now getting close to being profitable for producers to sell.  Most Rice farmers were not paying much attention to the market as they are involved in other pursuits.  Demand in general has been slow for Rice for both exports and domestic uses. 

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Weekly Chicago Rice Futures

Palm Oil and Vegetable OilsPalm Oil closed higher last week on reports of bad weather in growing areas that is delaying harvest and on strong export data from SGS and AmSpec. Soybean Oil closed higher as well and this helped Palm Oil rally. Hopes for improved demand from China were reported but export demand overall has improved lately. China has tried to relax some Covid restrictions so that quarantines now need to be eight days instead of at least two weeks. However, new outbreaks of the virus are being reported so the cities are still imposing lockdowns. Ideas are that supply and production will be strong, but demand ideas are now weakening and the market will continue to look to the private data for clues on demand and the direction of the futures market. Demand reports for the current month were stronger yesterday. Canola was lower last week on follow-through selling tied to chart patterns and ideas that Chinese demand can remain weak due to increased outbreaks of Covid there. Reports indicate that domestic demand has been strong due to favorable crush margins. Production was much improved this year on better weather during the Summer. 

Weekly Malaysian Palm Oil Futures

Weekly Chicago Soybean Oil Futures

Weekly Canola Futures:

Cotton: Cotton was lower Friday in range trading on poor weekly export sales data and also lower for the week as demand has not been really strong so far this year. A weaker US Dollar Index helped support Cotton on ideas that export demand could increase in the next few weeks. Demand has not improved with the reduction in prices and a lower US Dollar to date.  China had been making some initial moves to open its economy and country again.  China was making moves to shore up the housing sector in the country.  There are hopes that China is about to open again despite its zero-tolerance Covid policies.  However, Covid has surged there and the government might need to postpone or delay the moves to open the country again.  Production in the US is very short.  The trade is still worried about demand moving forward due to recession fears and Chinese lockdowns but is also worried about total US production potential.  It is possible that the continued Chinese lockdowns will continue to hurt demand for imported Cotton for that country and that a weaker economy will hurt demand from the rest of the world. 

Weekly US Cotton Futures

Frozen Concentrated Orange Juice and CitrusFCOJ was higher on Friday and for the week. It looks like the market might have completed a short-term low and turned trends up on the daily charts. Historically low estimates of production due in part to the hurricane and in part to the greening disease have hurt production remain in place. The weather remains generally good for production around the world for the next crop but not for production areas in Florida that have been impacted in a big way by the storm.  Brazil has some rain and the conditions are rated good. Mostly dry conditions are in the forecast for the coming days. Brazil told Bloomberg News that US imports of its juice are up 58% for the first four months of the marketing year ad were 112.500 tons in October alone. USDA said that FCOJ in Cold Storage is now 307.857 million pounds, from 353.163 million in September and 551,043 million last year. 

Weekly FCOJ Futures

CoffeeNew York and London closed higher on Friday and for the week last week despite news of much improved growing conditions for Coffee this year in Brazil and in part because of ideas of less than expected production in Brazil this year.  The move came with the US Dollar Index moving lower last week.  The daily charts show the potential for both markets to bottom out and start to work higher at this time..   Weather conditions are good in Brazil and the rest of Latin America and supplies available to the market should keep increasing and the market is looking forward to the increased supplies. Ideas are that the market will have more than enough Coffee when the next harvest comes in a few months. Ideas of a significant recovery in world production next year remain the main cause for any selling. More showers and rains are in the forecast in Brazil Coffee areas for this week. The rest of South America and Central America are reported to be in good condition. Vietnam has scattered showers in Coffee areas. 

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Weekly New York Arabica Coffee Futures

Weekly London Robusta Coffee Futures

Sugar: New York and London closed lower last week, and trends are still mixed in both markets although the charts do indicate that additional price weakness is possible in the coming days. It looks like the futures are starting to anticipate an increase in supplies available to the market and offers should increase more from Brazil and India. The weather in Brazil remains good for the next crop.  More ideas that supplies of White Sugar would soon be increasing for the market have weighed on prices for the London market. The world Sugar market is expected to be in a big surplus production next year. The supply remains tight for now but supplies are starting to increase. Brazil’s Sugar offers are increasing on ideas of unprofitable Ethanol prices coming to the country and reports of increased use of Corn for Ethanol production. Indian exporters continue selling into the world market. Unica said on Friday that Sugarcane production increased by 109% from last year to 26.3 million tons for the first half of November.  Sugar production for the period was 1.7 million tons, an increase of more than 163% and ethanol production was 1.3 billion liters, an increase of 72% from last year. The production mix was 48.45 Sugar and 51.6% Ethanol. The mix was 39.6% Sugar and 60.4% Ethanol last year.     

Weekly New York World Raw Sugar Futures

Weekly London White Sugar Futures

CocoaNew York and London closed lower on Friday but higher for the week. Trends are mixed in both markets for the holidays but both show the chance to work higher in the next few weeks. Ivory Coast arrivals appear to have improved lately with the recent rally in futures prices. Good production is reported and traders are worried about the world economy moving forward and how that could affect demand.  Supplies of Cocoa are as large as they will be now for the rest of the marketing year. Reports of scattered showers along with very good soil moisture from showers keep big production ideas alive in Ivory Coast.  The weather is good in Southeast Asia. 

Weekly New York Cocoa Futures

Weekly London Cocoa Futures

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(Featured image by ulleo 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.