Linked In
News In
Linked In

You are viewing 1 of your 2 complimentary articles.

Register now to receive full access.

Already registered?

Login | Join us now

PM markets: Irma veers west. Cotton, juice prices head north

Twitter Linkedin

Hurricane Irma's forecast path took a turn west, pushing it right through centre-west Florida, up into Georgia.

And with that, New York

orange juice

futures soared anew, with Florida by far the top US orange growing state, and juice producer, with


gaining support too.

"The latest hurricane track cone now brings widespread rain to the Delta, South East, and lower Midwest," said Terry Reilly at Chicago broker Futures International.

"Expect serious damage to Florida's


cane, citrus trees, cotton, and vegetable crops."

'In danger of yield and quality losses'

For the Florida orange industry, the fear is not just of immediate damage from winds expected at 74-110mph, as Irma rips through the state, but that many growers will shift into other crops rather than bother replanting, and wait 5-7 years before trees reach full production.

Whatever, the best-traded November orange juice contract soared 4.4% to 152.80 cents a pound in early afternoon deals in New York, earlier touching its 200-day moving average at 154.63 cents a pound for the first time in nigh on eight months.

New York-traded cotton, meanwhile, gained 1.3% to 75.20 cents a pound for December delivery.

Louis Rose at Rose Commodity Group said that Hurricane Irma's latest projected path places "a larger area of US cotton acreage, in Alabama, Florida, and south east Georgia, in danger of yield and quality losses compared with the previously published track.

"Too, the most recent forecast shows that rain and showers associated with the storm could reach into the northern Mississippi River Delta," with heavy rains less than ideal at this time of year, when many crops have open bolls at risk of rotting in wet conditions.

'Lots of chatter about a lower dollar, but…'

The gains in cotton might have been bigger were it not for some disappointing US export sales data for last week, at 119,100 running bales including Pima, less than half the previous week's total.

Indeed, for all the talk of a weaker


, which earlier on hit its lowest since January 2015, there was a bit of a "show me" theme about whether the softer currency would actually translate into higher US crop export sales.

"The dollar weakness needs to translate into some real demand before it can be counted as a bullish input," said Tregg Cronin at Halo Commodity Company.

At RJ O'Brien, Richard Feltes said that there was "lots of chatter about a lower dollar boosting US exports.

"But there is no evidence as yet that the lower dollar is offsetting the impact of record Brazil row crop loadings undercutting US exports."

'Negative undertows'

In fact, weekly US export sales for


were good, at some 1.16m tonnes (putting net cancellations for 2016-17 against the 1.52m tonnes of new season orders ).


at 650,000 tonnes or so, on the same basis, were OK too.

Still, export sales so far are still well behind, compared with last year's pace.

"Importantly, new crop corn sales are down 6.5m tonnes versus a year ago, while soy sales are down 6.9m tonnes," RJ O'Brien's Richard Feltes said.

The lag in US soy sales, combined with the prospect of higher Brazil soy sowings, when plantings begin next week in earnest and a fear that USDA "is understating 2017 US soy area are negative undertows for the soy market", he added.

'Positive for prices'

There are some causes for support too, in the weather outlook, which Mr Feltes acknowledged leant "positive" for prices, with a "drier tone in the 6-10 day Midwest forecast, unfavourably wetter conditions in Argentina, and being unfavourably drier in Ukraine".

Benson Quinn Commodities flagged that "the forecasts continue to point to dry conditions for the bulk of the Corn Belt through the end of the month".

Still, soybean futures for November stood down 0.3% at $9.66 a bushel in Chicago, with an hour or so's trading to go.

Corn futures for December, meanwhile, were up 0.4% at $3.56 ¾ a bushel.

Corn vs soybeans

If that seemed a little against the run of play, corn's relative strength was down at least in part to a more positive attitude to spreads in the grain against soybeans.

"There is only so much you can do with that spread, when you are making fresh all-time highs in the November soybean-December corn ratio," said Mike Zuzolo at Global Commodity Analytics.


, which has also been the target of short bets, joined in on the act too, adding 0.3% to $4.38 ¾ a bushel in Chicago for December delivery, despite some poor US export sales data, at 375,500 tonnes, down 30% week on week.

Spring wheat data were particularly poor, yet Minneapolis futures added 0.3% to $6.51 ¾ a bushel, continuing to find support in a stronger Canadian dollar (Canada is a huge spring wheat exporter) and protein worries.

"The world has plenty of lower protein milling wheat, but still worries persist for tighter protein supplies," said CHS Hedging.

Flowering worries

Back in New York,

arabica coffee

looked for a firm finish to a mixed week, standing 1.1% higher at 130.55 cents a pound for December delivery.

Negative pressure on values this week has been applied by talk of a decent start to early flowering for coffee trees, ahead of the 2018 harvest/

After some good rains, "early flowering has been reported in Brazil," said Jack Scoville at Price Futures.

"Pictures show that flowering is off to a very good start."

However, dryness has returned to coffee areas, "and some producers are worried that the rains came too early and created premature flowering", Mr Scoville said.

"The flowers could drop and reduce the production potential."

'Degree of speculation'

The analysis was echoed by merchant I&M Smith, which said that "Brazil weather reports indicate that most of the main coffee districts have had a dry week and it is likely to remain the same for the coming week.

"This is likely to bring forth some degree of speculation over the threat to the sustainability of the early flowering that came with the early rains during last month, over most of the main arabica coffee districts."

Already there have been question marks over Brazil's ability to achieve a 60m-bag crop next year, as some have forecast.

"'But it is early days and the focus remains upon the prospects for the rains late this month and during October."

By Mike Verdin

Twitter Linkedin
Related Stories

Evening markets: robusta coffee misses out on pre-holiday cheer

Many markets strengthen into Thanksgiving, including sugar and soybeans, helped by a stronger real. Will volatility reign after the holiday?

Corn and lean hogs top agricultural commodity bets for 2018, says Rabobank

... while palm oil is the worst, and live cattle price prospects not much better. What of wheat, soybeans and La Nina?

Morning markets: Soybean futures attempt revival of seasonal gains

... helped by buoyancy in the soyoil market, which spreads to palm oil too. In grains, short-covering slows for now

Evening markets: Wheat futures rebound, amid Russia radioactivity caution

... not that there is alarm over the finding in Russia’s Urals. The reversal theme touches the likes of cotton and arabica coffee too
Home | About | RSS | Commodities | Companies | Markets | Legal disclaimer | Privacy policy | Contact

© 2017 and Agrimoney are trademarks of Agrimoney Ltd
Agrimoney is part of the Briefing Media group
Agrimoney Ltd is registered in England & Wales. Registered number: 09239069