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Weather Extremes to Impact Cotton Production

Cotton futures were a little lower last week as a tropical system formed in the Gulf of Mexico and missed Cotton production in the Southeast and Delta for the most part. The storm brought heavy rains and a lot of damage, but mostly away from Cotton areas. Bolls are opening and fiber could be damaged. Texas growing areas were away from the storm and were not affected. 

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Wheat: Wheat was mixed, with HRW a little higher and SRW a little lower. Minneapolis was lower but rallied off the lows to close near the bottom of a recent trading range. The weekly export sales was poor once again. The demand has not been seen here, so the Winter Wheat markets have not been able to do more than hold in a range. Hurricane Ida did not reach into most Wheat areas, but could have brought some big rains to some SRW areas.  Wheat loading ports in the US are mostly in Texas or the PNW and were not affected. 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 US and Canada are seeing some showers this week. Crop size estimates in Russia have been reduced and domestic Russian prices are above world prices. The Russian weather has been good for production in northern and western areas but is still trending dry in southern areas and into Kazakhstan. The weather in China and Europe is wet and there is potential for reduced quality in Europe. 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. 

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 last week on ideas of increasing production and less demand. The trade widely expects USDA to show improved yields in its production estimates next Friday, and planted area is expected to increase as well. In the meantime, demand ideas are dropping due to less than hoped for demand at the current time and now because of the effects of Hurricane Ida. The hurricane moved onshore in Louisiana and did extensive damage to the state, including the grain export elevators. The state also lost electrical posser in all affected areas and it will take some time for that to get fixed.  Damage assessments for the elevators is expected this week. The weather remains a feature of the trade but is less important now as pollination is done and the Corn is filling kernels and starting to mature. Some forecasts call for improved weather, especially in the northern and western belt. Ideas are that Brazil Corn production could be less than 85 million tons so reduced production estimates are expected in coming reports.  Oats were lower last week as the weather remains bad for production even with the crop near or in harvest. 

Weekly Corn Futures

Weekly Oats Futures

Soybeans and Soybean Meal: Soybeans and Soybean Meal were lower and trends are turning down on the weekly charts. Funds were the most active traders in all three markets. The destruction of Gulf port facilities along the Mississippi River near New Orleans was the reason for the big selling. The hurricane moved onshore in Louisiana and did extensive damage to the state, including the grain export elevators. The state also lost electrical posser in all affected areas and it will take some time for that to get fixed. Damage assessments for the elevators is expected this week. Demand has held together despite the export problems. China bought more shipments of Soybeans last week but demand is still weaker than expected overall. USDA will release its production and supply and demand reports this week and the trade widely expects USDA to show more production due to better yields and increased planted area.

Weekly Chicago Soybeans Futures:

Weekly Chicago Soybean Meal Futures

Rice: Rice closed a little lower last week and the price action has been weak as the harvest makes progress in the south. Harvesting continues in Louisiana and Texas. A delayed harvest is expected in Mississippi and Arkansas. Initial yield reports and quality reports have been acceptable to many in Texas and are called good in Louisiana. Smut has been reported in Texas but the smut is coming off the grain in the cleaning process and the problem is considered to be minor. The harvest pace is expected to be slow due to ongoing showers in both regions and farther into the north.  Ideas of average yields are also heard in Arkansas and Mississippi. Growing conditions have been mixed at best with many areas getting too much rain. 

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Weekly Chicago Rice Futures

Palm Oil and Vegetable Oils: Palm Oil closed lower last week on demand concerns. Exports were not strong last month and the trade expects big ending stocks when MPOB releases its monthly data later this week. 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 lower last week as the harvest is getting ready to start. Damaging weather continues in the Canadian Prairies and northern Great Plains but some showers are in the forecast for this week.  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 and the rains are coming too late. 

Weekly Malaysian Palm Oil Futures

Weekly Chicago Soybean Oil Futures

Weekly Canola Futures:

Cotton: Futures were a little lower last week as a tropical system formed in the Gulf of Mexico and missed Cotton production in the Southeast and Delta for the most part. The storm brought heavy rains and a lot of damage, but mostly away from Cotton areas. Bolls are opening and fiber could be damaged. Texas growing areas were away from the storm and were not affected. 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. However, the expansion of the Delta variant has given pause to the better demand ideas due to fears of economies here and around the world starting to partially lockdown again. Production ideas are being impacted in just about all areas due to the weather extremes. It has been very hot in parts of Texas and the Delta and Southeast have had drenching rains at various times in the last couple of months. 

Weekly US Cotton Futures

Frozen Concentrated Orange Juice and Citrus: FCOJ closed near unchanged last week as Hurricane Ida came onshore in Louisiana. The storm missed all of Florida but some buying was appearing just in case. Two more tropical systems have formed in the Atlantic now but both appear headed well north of the state. Temperatures are now at or above seasonal averages in Brazil after a freeze a few weeks ago. 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, but earlier dry weather might have hurt production. Northeastern Mexico areas are too dry, but the rest of northern and western Mexico are rated in good condition. 

Weekly FCOJ Futures

Coffee: New York and London closed higher last week and chart patterns remain mostly up.  London was the stronger market again as New York closed near the lows of the week. London is having trouble sourcing Coffee from Vietnam due to a shortage of containers to carry the Coffee out of the country. Prices in New York have stayed firm as the current Brazil harvest starts to wind down with smaller production. Brazil forecasts call for above-normal temperatures for at least the next week, but the damage from the freeze a couple of weeks ago is easy to see. The dry weather is helping to keep the flowers from appearing. It is flowering time for the next crop. Some trees were killed and will have to be replaced. The current outlook calls for 10 days of dry weather which will not support the flowering but will keep the harvest active.  Improved showers are now in the forecast for Southeast Asia. Good conditions are reported in northern South America and good conditions reported in Central America.  Colombia is having trouble exporting Coffee due to protests inside the country. Conditions are reported to be generally good in parts of Africa, but Ivory Coast and Ghana have been a little dry.

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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 as the reduced production potential from Brazil is still impacting the market. Ideas are that India can supply the missing Sugar, but the ISO has noted that this will be the second year of deficit production. Demand for Sugar has been weaker. Ideas are that the Brazil freeze hit one million hectares of Sugar area and that the world will have a deficit production for the coming year. Consumption of Sugar remains on the light side.  Fears that the Covid is returning and could reduce economic activity and demand held sway. The market is still working through a short supply. The freeze and drought damage is there in Brazil as industry sources have said to expect a short season for processing. There is little White Sugar left in India for the export market but monsoon rains are promoting good conditions for the next crop. Thailand is expecting improved production.  Ethanol prices are now below parity with Sugar so the interest in producing more Sugar should be increasing. 

Weekly New York World Raw Sugar Futures

Weekly London White Sugar Futures

Cocoa: New York and London closed a little higher last week. Buying came from speculators. Ivory Coast has stopped selling for the next crop on fears of less supplies. The grind data was released recently and showed a strong recovery from the Covid times. World economies are starting to reopen after Covid and the open economies are giving demand the boost. The weather has had below-normal rains in West Africa and crop conditions are rated good for now but there is concern about the lack of rain.  Some are forecasting less production in the coming year.

Weekly New York Cocoa Futures

Weekly London Cocoa Futures

(Featured image by Yulya Korban via Unsplash)

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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.