ICE Softs Fast Facts: Spring Plantings Come to Focus

Springtime is nearly here and with that comes hopes for sufficient rain to get crops in the ground, but not too much so that field work and preparations are delayed. California has been drenched with far too much rain and more is on the way but the rest of the United States ag belt is heading into springtime with reasonably good conditions. Only the southeast has slightly below normal soil moisture levels but nothing at this point to be too concerned about. Pre-planting expectations for cotton were for about a 10% increase in acreage this year in the United States but with prices pushing against 80 cents. It is possible that the bump up in acreage could be closer to 13%-15%. With conditions good heading into plantings it sets the stage for favorable yields, similar to what happened this current season. Old crop/new crop spreads are certainly starting to reflect the idea that supplies next season could climb faster than demand.

The weather in Brazil will be important for the start of the sugarcane harvest in the key center/south region and then also for the final development of the coffee crop. There has been a good mix of rain and sunshine that has aided crop prospects and if this continues then the coffee crop could surprise to the upside. The trees have been stressed from the large Arabica harvest this season, but coffee trees have a tendency to bounce back quickly and show strong resiliency. While a seasonal downswing is likely, it is doubtful that production will be at the lower end of the ranges being bantered about with a decline of as much as 20% in 2017-18. The fall in the market of late certainly would seem to reflect an easing of worries over the next crop.

Potential for an El Niño could keep the markets active later in the year.

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