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COTTON
General Comments: Cotton closed higher on follow through buying tied to the USDA reports. USDA surprised the market on Thursday when it released its monthly supply and demand reports. The reports showed a significant drop in production of US Cotton and much reduced US ending stocks levels. The reports were bullish and a move to the upper end of the 70 cents range is possible. Harvest is wrapping up amid drier weather conditions in West Texas and the Delta and Southeast. The weekly export sales report showed very strong demand last week. Export demand has held strong despite stay at home orders and weaker economies around the world. Traders now hope for even more demand later as the vaccines are given out and the world economies start to recover.
Overnight News: The Delta and Southeast will get mostly dry conditions except for some showers on Friday in the Delta. Temperatures should average near to below normal in the Delta and in the Southeast. Texas will have mostly dry conditions and near to below normal temperatures. The USDA average price is now 70.38 ct/lb. ICE said that certified stocks are now 86,125 bales, from 86,125 bales yesterday. ICE said that 0 notices were posted for delivery against December contracts and that total deliveries for the month are now 354 contracts.
Chart Trends: Trends in Cotton are up with objectives of 7490, 7740, and 7930 March. Support is at 7350, 7250, and 7200 March, with resistance of 7470, 7500 and 7530 March.

FCOJ
General Comments: FCOJ was lower on follow through selling tied to the USDA production report that showed better production of oranges in Florida than had been expected. The weather in Florida remains mostly benign. Florida has been spared any hurricanes or other serious storms this year in a year that has been very active for tropical storms. The Coronavirus is still promoting consumption of FCOJ at home. Restaurant and food service demand has been much less as no one is dining out. The weather in Florida is good with frequent showers to promote good tree health and fruit formation. Brazil has been too dry. Showers are falling in Brazil now and these need to continue to ensure good tree health. Mexican crop conditions are called good with rains.
Overnight News: Florida should get scattered showers through Thursday, then dry conditions. Temperatures will average below normal. Brazil should get scattered showers and above normal temperatures.
Chart Trends: Trends in FCOJ are down with objectives of 112.00 and 110.00 January. Support is at 116.00, 113.00, and 110.00 January, with resistance at 120.00, 122.00, and 124.00 January.

COFFEE
General Comments: Futures were higher last week in both markets with New York leading the way. Ideas of poor flowering for the Brazil crop and high offer prices from Central America are supporting New York and to a lesser extent London. It has been a weather market and the weather has improved. Vietnam has harvested about a quarter of its projected production under mostly dry conditions. Central America is also drier for harvesting. Brazil is getting some rains now to improve flowering after an extended dry season. The demand from coffee shops and other food service operations is still at very low levels as consumers are still drinking Coffee at home. Reports indicate that consumers at home are consuming blends with more Robusta and less Arabica. The weather is good in Colombia and Peru.
Overnight News: ICE certified stocks are higher today at 1.335 million bags. The ICO daily average price is now 116.50 ct/lb. Brazil will get scattered showers, mostly in the south, with near to above normal temperatures. Central America will get scattered showers after a hurricane earlier this week. Vietnam will see some big rains. ICE said that 0 contracts were tendered for delivery against December futures and that total deliveries for the month are now 1,592 contracts.
Chart Trends: Trends in New York are up with objectives of 127.00, 130.00, and 135.00 March. Support is at 120.00, 116.00, and 113.00 March, and resistance is at 128.00, 129.00 and 130.00 March. Trends in London are mixed to up with objectives of 1420, 1460, and 1780 March. Support is at 1330, 1310, and 1290 January, and resistance is at 1370, 1380, and 1390 January.

SUGAR
General Comments: New York and London closed lower on improving weather conditions in Brazil. It has been raining in south central Brazil and the production of cane has been affected. Rains are now spreading north to help the cane in those areas. The first half of November crush was down almost 20% from the previous year as cane production has been hurt due to dry weather earlier in the year. Brazil mills have been producing more Sugar and less Ethanol due to weak world and domestic petroleum prices. India has a very big crop of Sugarcane this year. The Indian government has not announced the subsidy for exporters of Sugar so no exports are coming out of India yet. One could be announced soon according to the newswires. Sources told wire services that any subsidy will need to be significant to get export sales on the books. Thailand might have less this year due to reduced planted area and erratic rains during the monsoon season. The EU is having problems with its Sugarbeets crop due to weather and disease.
Overnight News: Brazil will get scattered showers. Temperatures should average above normal.
Chart Trends: Trends in New York are down with objectives of 1320, 1300, and 1240 March. Support is at 1400, 1380, and 1370 March, and resistance is at 1450, 1510, and 1530 March. Trends in London are down with objectives of 381.00, 364.00, and 316.00 March. Support is at 389.00, 381.00, and 376.00 March, and resistance is at 396.00, 401.00, and 406.00 March.

DJ Brazil’s Unica Sees 2020-2021 Center-South Sugar Output at 38.4M Tons
By Jeffrey T. Lewis
SÃO PAULO–Sugar production in Brazilian sugar mills in the country’s center-south region soared in the 2020-2021 season, helped by higher-quality raw material, according to industry group Unica.
The region, which grows about 90% of the country’s sugar cane, will produce 38.4 million metric tons of sugar in the current production season, which finishes at the end of March, Unica said Tuesday. In the 2019-2020 season, the region produced 26.8 million tons of sugar
The region’s mills will crush 605 million tons of cane, up from 590.4 million tons a year earlier, and will make 30.4 billion liters of ethanol, down from 33.3 billion liters a year earlier.
The quarantine measures imposed in Brazil due to the coronavirus pandemic slammed the country’s economy and slashed demand for ethanol and other fuels. Center-south mills switched more production over to sugar from the alternative fuel as a result, with good prices abroad for the sweetener also spurring greater sugar output.
Good quality cane, containing high levels of sugar, also helped boost sugar output, according to Antonio de Padua Rodrigues, Unica’s technical director.
Write to Jeffrey T. Lewis at jeffrey.lewis@wsj.com

DJ Brazil’s Conab Raises 2020-21 Sugar Production Forecast Again
By Jeffrey T. Lewis
SÃO PAULO–Brazilian sugar mills are likely to produce more of the sweetener in the 2020-2021 season than a year earlier amid reduced consumption of ethanol as a result of the coronavirus pandemic and good prices for sugar exports.
Brazilian crop agency Conab raised its forecast for sugar production in the season to 41.8 million metric tons, from its forecast of 39.3 million tons in its August report.
This was the second time Conab raised its sugar output forecast. The August number was higher than the agency’s original forecast of 35.3 million tons. Brazil produced 29.8 million tons of sugar in the 2019-2020 season.
Most of Brazil’s sugar mills can switch between production of sugar or ethanol depending on which is more profitable. The country has the world’s biggest fleet of vehicles that can run on either gasoline or the alternative fuel, and drivers often choose one or the other based on the price at the pumps.
With the start of the pandemic in March, demand for ethanol and other fuels plummeted, spurring many mills to boost output of sugar instead. Ethanol use has mostly recovered as social-distancing measures were relaxed and economic activity increased, but bad weather in other sugar-producing countries has helped support prices for the sweetener and encouraged mills to boost output.
Conab raised its forecast for the sugar cane crop, to 665.1 million metric tons from its forecast of 642.1 million metric tons in the August report. The country grew 642.7 million tons of cane in 2019-2020.
Conab also raised its forecast for total ethanol production in the 2020-2021 season. Brazil produces ethanol mostly from sugar cane, but output using corn as a base is also increasing. Brazil is likely to produce 32.9 billion liters of ethanol this season, Conab said. In August the agency forecast ethanol production of 30.6 billion liters and in 2019-2020 Brazil produced 35.7 billion liters.
Write to Jeffrey T. Lewis at jeffrey.lewis@wsj.com

COCOA
General Comments: New York and London closed sharply lower again last week. Importers are still looking for ways to source Cocoa without paying a premium demanded by Ivory Coast and Ghana. Both countries have instituted a living wage for producers there and are looking to tax exports to pay the increased wages. Buyers have been accused of using certified stocks from the exchange instead of buying from origin. However, it looks like the exchange buying has come to a halt for now. There are a lot of demand worries as the Coronavirus is making a comeback in the US. Europe is also seeing a return of the pandemic. The North American and European cocoa grinds were at least 4% lower than a year ago and the Asian cocoa grind was down 10% from last year. Ivory Coast arrivals are now 909,000 tons, down 0.4% from the previous year.
Overnight News: Sporadic and light showers are forecast for West Africa. Temperatures will be near normal. Malaysia and Indonesia should see showers. Temperatures should average above normal. Brazil will get mostly dry conditions and near to above normal temperatures. ICE certified stocks are lower today at 2.962 million bags. ICE said that 1 contract was tendered against December Cocoa and that total deliveries for the month are now 1,255 contracts.
Chart Trends: Trends in New York are mixed to down with no objectives. Support is at 2580, 2520, and 2450 March, with resistance at 2630, 2650, and 2670 March. Trends in London are mixed. Support is at 1760, 1730, and 1700 March, with resistance at 1790, 1800, and 1830 March.

DJ Seizure of Beans Hobbles Cameroonian Cocoa Trade
By Emmanuel Tumanjong
Special to Dow Jones Newswires
YAOUNDE, Cameroon–Persistent armed attacks and seizure of cocoa beans in Cameroon’s conflict-hit Southwest region has severely weakened cocoa trade in the region in the past weeks, farmers and buyers said Tuesday.
Farmers have been forced to hoard their harvests from the farmgates in the middle of the main crop production, as separatist gunmen launch sporadic attacks on farmgates and seize beans, the farmers and traders said.
“I have lost more than three tons of cocoa to the secessionists during the last two weeks,” said George Egbe, a farmer in the big cocoa-growing southwestern town of Mamfe.
Buyers and farmers report similar cases of armed robberies in big cocoa-producing localities in the English-speaking province, including in Kembong, Kumba, Tombel, Bangem, Nguti and Muyuka.
“The cocoa they seize from us is transported and sold in neighboring Nigeria,” said Kumba-based cocoa farmer Oswald Messumbe.
Traders said cocoa beans have become scarce at the farmgates in southwestern Cameroon because farmers are hoarding the crop from the markets.
“We fear that prices could keep an uptick at the farmgates in the weeks ahead,” said Jacques Nchinda, a cocoa trader in Kumba.
Rocked by armed conflicts between separatists and government-deployed troops, the Southwest region, which used to account for at least half of the country’s national yearly bean output, has seen its cocoa harvest plummet to 28.4% in the last four years, according to industrial and government figures.
Write to Barcelona Editors at barcelonaeditors@dowjones.com

Questions? Ask Jack Scoville today at 312-264-4322
 
 
 
 

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