Commodities Markets Report. Week 44 2022

Global weather review

  • This year La Niña returns for the third consecutive winter, driving warmer-than-average temperatures for the Southwest and along the Gulf Coast and eastern seaboard, according to NOAA’s U.S.
  • Winter Outlook released today by the Climate Prediction Center — a division of the National Weather Service. Starting in December 2022 through February 2023, NOAA predicts drier-than-average conditions across the South with wetter-than-average conditions for areas of the Ohio Valley, Great Lakes, northern Rockies and Pacific Northwest.
  • NOAA forecasters, in collaboration with the National Integrated Drought Information System (NIDIS), continue to monitor extreme, ongoing drought conditions that have persisted in the Western U.S. since late 2020, as well as parts of the central U.S. where historic low-water conditions are currently present.
  • Drought conditions are now present across approximately 59% of the country, but parts of the Western U.S and southern Great Plains will continue to be the hardest hit this winter.
  • The 2022-2023 U.S. Winter Outlook map for precipitation shows wetter-than-average conditions are most likely in western Alaska, the Pacific Northwest, northern Rockies, Great Lakes and Ohio Valley. Drier-than-average conditions are forecast in portions of California, the Southwest, the southern Rockies, southern Plains, Gulf Coast and much of the Southeast.
  • Freezing temperatures hit Argentina this week damaging corn, soybean and wheat crops.
  • The withdrawal of the southwest monsoon accelerated, bringing needed drier weather to northern India.

Dollar Index

Commodities Index

Sugar: Sell

Sugar is bearish on the back of larger sugar production from India and Brazil, larger sugar export from India and global surplus of sugar at the markets.

  • March NY world sugar on Wednesday closed down -0.25 (-1.38%), and Dec London white sugar closed down -5.00 (-0.95%).
  • NY sugar dropping to a 3-week low and London sugar falling to a 5-week low.
  • Prices are under pressure on an easing of sugar supply concerns.
  • The International Sugar Organization (ISO) projected global 2022/23 sugar production would climb +4.5% y/y to 181.9 MMT, a 5-year high.
  • ISO projects the 2022/23 global sugar market to be in surplus by +5.6 MMT.
  • The Indian Sugar Mills Association forecasted that India's 2022/23 sugar production (Oct 1-Sep 30) would climb +2% y/y to 36.5 MMT as Indian farmers boosted their planted cane acreage by +5.4% y/y to 5.6 mln hectares.
  • In 2021/22, India's sugar production rose +2.9% y/y to 35.8 MMT. India is the world's second-largest sugar producer. Also, robust sugar exports from India are bearish for prices after India 2021/22 sugar exports jumped +57% y/y to a record 11 MMT.
  • StoneX projected Brazil Center-South 2023/24 sugar production would climb +5.7% y/y to 35.2 MMT.
  • StoneX also projects that global 2023/24 sugar production would climb +3% y/y to 194.4 MMT on rising supplies from Brazil, India, and Thailand. StoneX predicts a 2022/23 global sugar surplus of 3.9 MMT.

Sugar: Weather review

Weather outlook for Brazil is a bit too wet however direct threat to sugar production is absent as summer was a bit too dry.

The withdrawal of the southwest monsoon accelerated, bringing needed drier weather to northern India. Key India’s producing sugar (Uttar Pradesh, Karnataka, Tamil Nadu) saw more that average amount of rain, however there is no risk of flooding,

Sugar Price Chart

Orange juice: Sell

Orange juice bearish stance is supported by lower consumption, hurricane Ian damage was not dramatic to orange trees in Florida, ongoing harvest season in Florida and larger Brazil exports.

  • Orange juice futures traded lower second week in a row after hurricane Ian hit Florida coast few weeks ago.
  • October to June is season in Florida for oranges to be collected, seasonality puts downward pressure for Orange Juice prices.
  • The panic after hurricane is over and therefore price is going down as not much of orange trees have been damaged.
  • USDA said in October report that orange production in Florida is down by 32% from last season, marking the scantiest predicted harvest in nearly 80 year.
  • In an October citrus report, the agency said the all-orange forecast for the Sunshine State was 28 million boxes, compared to 41 million boxes the year before
  • Despite lower production consumption of orange juice is lower too due to high food inflation in the US. Prices for 12-oz juice bottle are at $2.9 all times high. Americans tend to substitute orange juice by cheaper vitamin C drinks.
  • In late July the U.S. Department of Agriculture forecast that Brazil’s 2021/22 crop would be 15% higher than the 2020/21 crop.
  • More recent USDA data forecasts a Brazilian crop of 1.14 million metric tons up 20% from 944,000 tons the year before. If the forecast is correct, the crop would be the highest since the 2018/19 season.
  • Florida weather is favorable for orange harvest.
  • Harvest season in Brazil is from January to May therefore there is no weather associated risk.

Orange Juice Price Chart

Our Telegram channel

Subscribe to our Telegram channel, if you want to read our market reports and get other relevant information about trading!

Go to our Telegram

About the author

Max Schulz is a professional futures and commodities trader. He is the founder and head of InsiderWeek. For many years he has been helping people achieve their financial goals by training them in futures trading.

These articles might be interesting for you

Bulletin
Commodities Markets Report. Week 45 2022

Sugar is bearish on the back of larger sugar production from India and Brazil, Thailand...

Read more >>
Trading results
Our Futures Trading Results. Week 46 2022

-$1.948 — that’s the trading result from our commodity and futures trading according to COT data and our...

Read more >>
Bulletin
Commodities Markets Report. Week 44 2022

This year La Niña returns for the third consecutive winter, driving warmer-than-average temperatures for the Southwest...

Read more >>
Trading results
Our Futures Trading Results. Week 45 2022

-$3.016 — that’s the trading result from our commodity and futures trading according to COT data and our...

Read more >>
Bulletin
Commodities Markets Report. Week 43 2022

Below-average sea surface temperatures (SSTs) continued across the central and eastern equatorial Pacific Ocean during September...

Read more >>
Trading results
Our Futures Trading Results. Week 44 2022

+$16.871 — that’s the trading result from our commodity and futures trading according to COT data and our...

Read more >>
Bulletin
Commodities Markets Report. Week 42 2022

La Niña continues in the tropical Pacific, and is likely to persist into early 2023. Both atmospheric...

Read more >>
Trading results
Our Futures Trading Results. Week 40 2022

-$84 — that’s the trading result from our commodity and futures trading according to COT data and our...

Read more >>
Trading results
Our Futures Trading Results. Week 39 2022

+$9,946 profits. That’s the trading result from our commodity and futures trading according...

Read more >>
Trading results
Our Futures Trading Results. Week 38 2022

+$3,772 profits. That’s the trading result from our commodity and futures trading according...

Read more >>
Trading Strategy
3 Swing trading strategies for professionals and very busy people

You want to trade the world's financial markets success...

Read more >>
Trading Strategy
Learn swing trading: how to start swing trading step-by-step

You want to start learning how to trade, but you have no idea what exactly and where...

Read more >>
COT Report Trading Strategy

This is one of our major strategies that allowed us to increase our trading capital from $ 14.000 to over $ 550.000 within just 6 years...

Learn more >>

Sign up for our newsletter

We will notify you of upcoming webinars. We promise to only send the most useful information and not to spam.