Why Palm Oil Futures Were Lower This Past Week

Wheat:  Wheat markets traded lower last week as the war between Ukraine and Russia continued.  Trends are sideways to down on the daily charts and down on the weekly charts for the Winter Wheat markets and sideways for the Minneapolis market for Spring Wheat due to less than expected planted area projections from farmers.  Russia announced it was pulling back from Kiev and other cities in Ukraine but has failed to do so.  Russia instead appears to be deploying its army near the major cities but in new locations.  Ukraine has said it is willing to offer some concessions to Russia in return for peace, but what Russia will accept is still not known.  Ports are closed in Ukraine and Russian shippers and exporters are not offering in part due to sanctions but mostly due to the war and the chance to lose ships.  Ukraine can rail the exports to the EU for shipment but the amount that can be moved is very limited.  The USDA prospective plantings report was considered bullish for Spring Wheat with farmers indicating they would plant on just 11.2 million acres, and the stocks report was mildly bullish to Wheat with stocks at 1.025 billion bushels.  The weekly export sales report was poor. 

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 but inside the recent trading range on the daily and weekly charts last week partly in response to the USDA reports.  Some speculative long liquidation appeared to be getting done in the nearby months while new crop months held firm on the much reduced planted area ideas from farmers.  USDA estimated intended planted area at just under 89.5 million acres, a huge shock to the trade and below the lowest trade guess.  Farmers planted Corn on more than 93.3 million acres last year.  The quarterly stocks report showed supplies were 7.85 billion bushels, below the average trade guess but a little above last year.  The potential loss of Ukraine exports of Corn makes the world situation tighter and could be enough to keep Corn prices trending higher for now.  Ukraine might not plant much if any Corn this Summer and already has trouble exporting it or Wheat.  The ports remain closed and Ukraine can rail out to the EU in limited amounts.  Russia is also a Corn exporter and no product is moving from either country at this time  China has a Covid outbreak again and has closed some cities and some ports in response.  The moves are harsh but China has a no tolerance policy about the pandemic.  The closings of cities and ports will hurt the economy as people can’t make or spend money and hurt imports as there will be fewer places to unload cargoes. 

Weekly Corn Futures

 Weekly Oats Futures

Soybeans and Soybean Meal:  Soybeans and the products were lower last week in response to the USDA reports and worries about Chinese demand because of Covid lockdowns there.  USDA showed higher than expected planting intentions at 90.95 million acres and higher than expected stocks levels at 1.93 billion bushels.  The war in Ukraine dragged on and as supplies available to the export market from South America remain limited.  Ukraine said it would propose that Russia keep the eastern areas it has already conquered, and that Ukraine would not join NATO   Russia said it will move back to eastern Ukraine that it already controls but so far has kept its forces near the major cities.  Both are major exporters of Sunoil and control about 80% of the market combined.  China has been a major buyer of US Soybeans this year after a very slow start due to the problems in South America.  They are buying for this year and already have booked a large amount of new crop Soybeans to cover future needs.  Ideas are that the Chinese economy could slow down due to the Covid lockdowns there and cause the country to purchase less Soybeans in the world market.  Shanghai has said it will remain open but asked office workers to work from home in a hybrid format.   The world situation is still tightening as Brazil and Argentina are getting into the harvest of less Soybeans.  Paraguay might import Soybeans this year from Argentina. 

Weekly Chicago Soybeans Futures:

Weekly Chicago Soybean Meal Futures

Rice:  Rice was lower last week a poor weekly export sales report.  New crop prices were fractionally higher on Friday on reduced planted area indications from farmers in the survey released by USDA.  Farmers intend to plant on about 2.45 million acres this year, from above 2.5 million last year.  There is a lot of concern about the high costs of raising Rice.  Russia has said it is pulling its troops back from Ukrainian cites to eastern areas it already controls but as failed to do so and appears to be deploying troops around the cities again.  Trends are sideways on the daily charts.  The cash market is showing that domestic mill business is around everywhere in lighter volumes.  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. 

Weekly Chicago Rice Futures

Palm Oil and Vegetable Oils: Palm Oil was lower last week on price action in outside markets and as China is closing down for Covid reasons again. A new Covid outbreak is reported there and cities and infrastructure has been shut down, including some airports and water ports.  The economy could slow down and affect demand.  Demand in Malaysia could improve soon as Indonesia is expected to keep most Palm Oil at home.  However, production from Malaysia is expected to increase as well as the Covid lockdowns finally go away and as the weather is good for production. Indonesia is once again making moves to cut the availability of Palm Oil for export as it manages high internal prices.  Canola was a little lower in response to the USDA reports and despite dry conditions in Canada.  It is reported to be very dry and has been cold for planting. There are ideas of reduced Sunflower export potential from Russia and Ukraine. The market is worried about South American production as well.  Canada produced a very short crop of Canola last year so supplies are tight.  Futures prices are still in a trading range.

Weekly Malaysian Palm Oil Futures

Weekly Chicago Soybean Oil Futures

Weekly Canola Futures:

Cotton:  Cotton was lower last week in part on increased planting intentions reported by USDA and in part on weaker than hoped for weekly export sales.  Farmers intend to plant 12.2 million acres of Cotton this year, up from about 11.2 million last year.  The news hurt new-crop futures.  Crude Oil was lower after the US government announced it would open the oil reserve to help cure the high petroleum prices and the lower Crude prices spilled into Cotton.  Russia announced it was pulling back from Kiev and other cities in Ukraine but has failed to do so.  Ukraine has said it is willing to offer some concessions to Russia in return for peace, but what Russia will accept is still not known.  Russia will move back to eastern Ukraine that it already controls and could launch a new offensive in the near term if the talks fail. not join NATO in return for peace.  China has been buying even with the port closures and domestic difficulties.  Traders are worried about Chinese demand moving forward.  China has closed two ports for imports due to Covid and is also closing down a number of cities as the Covid spreads through the nation.  Shanghai has asked office workers to follow a hybrid model used here in the US and is closing financial markets. 

Weekly US Cotton Futures

Frozen Concentrated Orange Juice and Citrus:  FCOJ was higher and trends are up on the daily and weekly charts.  The weather remains generally good for production around the world.  Brazil has some rain and conditions are rated very good.  Weather conditions in Florida are rated mostly good for the crops with a couple of showers and warm temperatures.  Mexican crop conditions in central and southern areas are called good with rains. Northern and western Mexico is rated in good condition.  Florida Citrus Mutual said FCOJ stocks are now 31% less than last year. 

Weekly FCOJ Futures

Coffee: Both markets were lower last week with a stronger Brazilian Real and on ideas of less demand from Ukraine, Russia, and China.  The lack of deliveries from Brazil and Indonesia are still supporting the futures market but the war is causing ideas of less Russian and Uranian demand and the return of Covid has the potential to really hurt Chinese demand as cities and ports have shut down there.  Less deliveries are reported from Vietnam now as producers have sold most of the crop and are holding the rest and waiting for higher prices.  Good growing conditions for the next crop in Brazil are still around but flowering is reported to be uneven this year in at least some areas. 

Weekly New York Arabica Coffee Futures

Weekly London Robusta Coffee Futures

Sugar: Both markets were lower last week on weaker Crude Oil futures.  The US government has proposed to open the reserve in an effort to lower petroleum prices here and this affected Sugar due to the potential for reduced ethanol demand from the lower prices.  Russia announced it was pulling back from Kiev and other cities in Ukraine but has failed to do so and instead seems to be deploying troops around the cities.  Ukraine has said it is willing to offer some concessions to Russia in return for peace, but what Russia will accept is still not known.  News reports indicate that little export activity is taking place from Ukraine or Russia with the Black Sea and Azov Sea ports basically closed.  Some of the oil giants have pulled operations out of Russia in response to the war, but others are still working there.   The Sugar trade could also be affected as both produce sugar beets.

Weekly New York World Raw Sugar Futures

Weekly London White Sugar Futures

Cocoa:  New York and London were higher last week as the weather is good for harvest activities in West Africa.  Some showers are in the forecast for West Africa and have been for several weeks.  Chart trends are sideways to up in New York and in London on the weekly charts despite improved crop conditions and in part despite demand fears as Europe is the leading per capita consumer of Chocolate and demand could drop if the war in Ukraine expands or even if it doesn’t.  Demand fears have eased as the rest of Europe is not harmed yet.  The weather is good in Southeast Asia.  The dry conditions in West Africa are now disappearing due to scattered showers in the region.  Ghana arrivals have been below year ago levels, but Ivory Coast arrivals have been above year ago levels.  Ideas are that demand will only improve slightly if at all and production in West Africa appears to be good this year. 

Weekly New York Cocoa Futures

Weekly London Cocoa Futures

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