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Why Higher Prices for Rice are Expected

Rice closed a little lower on Friday but higher for the week. The weekly charts look very positive for higher prices to come. A significantly weaker US Dollar supported the market at times last week. Trends have turned up on the daily charts as well as the weekly charts. It has been a demand-led market recently and the weekly export sales report was very strong. 

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Wheat: Wheat markets closed higher on Friday as speculative short covering was reported. Futures were lower for the week in response to a very poor week of export sales and the lack of any new war action on Ukraine by either the US or Russia.  It remains dry in the western Great Plains but some precipitation is expected. Ideas had 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 or less against previous years. Offer volumes are down in Europe. Dry weather in southern Russia, as well as the US Great Plains and Canadian Prairies, caused a lot less production. The lack of production has reduced the offers and Russia has announced sales quotas. Australian crop quality should be diminished. North Africa is very dry.

Weekly Chicago Soft Red Winter Wheat Futures 

Weekly Chicago Hard Red Winter Wheat Futures

Weekly Minneapolis Hard Red Spring Wheat Futures

Corn:  Corn closed lower last week in correction trading despite a strong weekly export sales report and weaker US Dollar.  Showers are still predicted for southern Brazil and northern Argentina and Paraguay and the situation there should become more stable.  Northern Brazil is expected to be drier to help with conditions there.  Ethanol stocks were very high and this implies less Corn demand for ethanol production moving forward. 

Weekly Corn Futures

 Weekly Oats Futures

Soybeans and Soybean Meal:  Soybeans and the products were sharply higher last week but ran into profit-taking late last week as traders started to look for a correction to the recent up move.  Analysts said early in the week that Brazil production could be between 125 and 129 million tons but further cuts are possible.  The data released by the state ag services in Brazil implies total Brazil production at 125 million tons to 127 million tons according to at least some analysts here in the US.  Production ideas at the beginning of the crop season were closer to 150 million tons for Brazil so the cuts are drastic and imply much more demand for US Soybeans down the road.  It was also very hot and dry in Argentina until recently and crop losses are reported there.  Showers are forecast for southern Brazil, Paraguay, and much of Argentina, then forecasts call for hot and dry conditions to develop again until at least the middle of the month.  Trends are up on the daily and weekly charts. 

Weekly Chicago Soybeans Futures:

Weekly Chicago Soybean Meal Futures

Rice: Rice closed a little lower on Friday but higher for the week.  The weekly charts look very positive for higher prices to come.  A significantly weaker US Dollar supported the market at times last week.  Trends have turned up on the daily charts as well as the weekly charts.  It has been a demand-led market recently and the weekly export sales report was very strong.  The cash market is showing that the domestic mill business is around everywhere.  Many producers are not interested in selling but some are selling the current crop and generating some needed revenue.  Producer sales are reported to have been way ahead of average early in the marketing year so stocks on hand in first hands are reported to be lower than normal.  Mills are showing more interest in the market as previously bought supplies start to run low.  The cash market is reported to be relatively strong as prices have held firm and as activity increases. 

Weekly Chicago Rice Futures

Palm Oil and Vegetable OilsPalm Oil was higher last week along with the rally in Crude Oil and as Indonesia moved to keep more Palm Oil in the country and away from the export market.  Demand in Malaysia could improve soon.  Indonesia is once again making moves to cut the availability of Palm Oil for export as it seeks to keep more at home for biofuels purposes. There are still poor production conditions in Malaysia and Indonesia. Traders are mostly worried about demand from India who has been buying Soybean Oil in the US instead of Palm Oil from Malaysia and Indonesia and is also worried about China and its demand for Palm Oil for biofuels. Production conditions have been very poor and workers are not often in the fields. Canola was a little lower in range trading last week. Support came from the rally in Chicago and the sharp reduction in Canola production in Canada this year. Chart trends are mixed. 

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Weekly Malaysian Palm Oil Futures

Weekly Chicago Soybean Oil Futures

Weekly Canola Futures:

Cotton: Cotton futures were lower on Friday but higher for the week as demand was strong once again.  The weekly USDA sales report showed very strong sales.  The US Dollar was weaker and kept export demand ideas strong but fears that the Fed might do something soon to rein in inflation kept selling interest around.  It’s been a demand market and futures have been correcting lower over the last few sessions in search of new demand.  Ideas are that demand remains strong for US Cotton even with the weaker export sales reports over the last couple of weeks.  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 for next year as planted area is expected to increase due to high cotton prices and the expense of planting Corn. Chart trends are still mostly up in this market. 

Weekly US Cotton Futures

Frozen Concentrated Orange Juice and Citrus: FCOJ was lower last week on moderate weather forecasts.  The freezing temperatures reported last weekend did little to hurt the crops. Temperatures in Florida are still below normal, but much warmer than last weekend. The trends are down on the daily charts.  Brazil has some rain and conditions are rated very good.  Brazil production was down last year due to dry conditions at flowering time and then a freeze just before harvest. Mexico is rated in good condition. 

Weekly FCOJ Futures

Coffee:  New York and London closed higher last week as Brazil producers are slow to export and as certified stocks on the New York exchange keep dropping.  Ideas continue that the next crop in Brazil is experiencing good growing conditions.  Vietnamese producers have been selling and Brazil producers have sold some coffee for the next crop.  The dry weather and then the freeze in Brazil have created a lot of problems for the trees to form cherries this year.  Big rains more recently in some Brazil growing areas have hurt cherry formation as well.  The logistical situation in both Vietnam and Brazil has eased in recent weeks but is still considered difficult and expensive to manage.  Brazil producers have sold most of the current year crop and are forward pricing for next year.  Vietnam producers are also selling and some of the Robusta is going to the exchange in London as differentials have weakened.  Vietnam is getting scattered showers on the coast but dry conditions inland.  The rest of Southeast Asia should get scattered showers in the islands and mostly dry conditions on the mainland.  Production conditions for the next crop in Colombia are not good due to too much rain.  Brazil exported 178,093 tons of Coffee in January, from 221,966 tons last year. 

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Weekly New York Arabica Coffee Futures

Weekly London Robusta Coffee Futures

Sugar:  New York and London were higher on Friday and a little higher for the week as the US Dollar moved lower.  Crude Oil futures were higher and ethanol data for the US showed very big supplies. The US Dollar moved lower last week.  There have been reports of improved growing conditions for the crops in central-south areas of Brazil.  Showers will continue into much of this week and crops should benefit from the return of moisture to the region.  Hot and dry weather is expected for southern areas after the rains pass this week.  Ideas are that the supplies are available from India and Thailand as harvests there are off to a good start but it will take a stronger price to get them into the market.  India has produced 18.7 million tons of Sugar so far this marketing year, up 5.6% from last year.

Weekly New York World Raw Sugar Futures

Weekly London White Sugar Futures

Cocoa:  Both markets closed higher last week on what was called speculative buying.  The weather is generally good for West Africa and Southeast Asia but some producers in West Africa are worried about the dry weather that has been noted for the last couple of weeks.  Ideas are that demand will continue to improve 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.  Some farmers want more rain for the best Spring harvest results.  Ivory Coast arrivals are now estimated at 1.340 million tons for the marketing year., up 1.5% from last year.

Weekly New York Cocoa Futures

Weekly London Cocoa Futures

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(Featured image by almatel 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.