Soft Commodities

Archive for Soft Commodities – Page 10

Kenya has lifted its ban on genetically modified crops: the risks and opportunities

By Benard Odhiambo Oloo, Egerton University

Kenya recently lifted a ban on the cultivation and importation of genetically modified crops amid the worst drought in 40 years and soaring food prices. This includes white maize, the country’s main staple. The decision was welcomed by scientists who see GM crops as the answer for food security. But it is opposed by a spirited lobby who are concerned about potential risks to health and the environment. Benard Odhiambo Oloo, who is a food safety and quality expert, provides insights into the debate.

What are GMOs?

Genetically modified organisms (GMOs) refer to plants, microbes or animals that have had their genetic make-up altered through the introduction of a select gene from another unrelated species. For crops this is usually for the purpose of conferring a desired characteristic such as increased yield, insect tolerance or drought resistance among others.

Genetic engineering refers to the science involved in the selection of desired genes responsible for specific traits from a species and transferring them into the genes of another organism, thus modifying the second species’ genetic makeup.

Humans have been improving the quality of domesticated crops for thousands of years. But this has mostly been through conventional breeding, where important traits are encouraged, selected and passed down from one generation to the next.

Conventional breeding would typically take 10-15 years. The turnaround for genetic engineering is usually less than five years. But, due to the strict regulations on commercialisation, most GM crops have been in the pipeline for decades especially in Africa.

How prevalent is their cultivation in Africa?

The approval and cultivation of GMOs in Africa has been slow. Only a few countries have allowed their commercialisation. South Africa has been a leader in adoption of GMO crops in Africa and has had experience spanning over a decade. The number of countries in Africa where GM crops are cultivated has grown from three in 2016 to 10 by 2022. These 10 countries have commercialised different types of GMO crops.

Apart from South Africa, Egypt, Sudan, Ethiopia, Burkina Faso, Malawi, Nigeria, Ghana and eSwatini have allowed the planting of GMO seeds. A number of other countries are at different stages of development and commercialisation of a number of GMOs.

The leading GMO crops under consideration across different countries (Kenya, Malawi, Uganda, Nigeria, Ghana and others) are GM cotton (tolerant to African bollworm), GM cassava (resistant to cassava brown streak disease) and GM maize (resistant to stem borer) among many more.

This year Ghana approved the release of pod borer resistant cowpea, thus joining the growing list of African countries to commercialise GM crops. This is the first genetically modified crop to be approved in the country.

In December 2019 the Kenyan government gave the nod for the commercialisation of GMO cotton. After more than two seasons of growing GM cotton, Kenyan farmers have expressed satisfaction with the good yield from Bt cotton in spite of the drought conditions in the last few seasons.

Elsewhere in Africa, farmers have also reported significant reduction in the cost of production through reduced spraying for control of insect pests and diseases. Controlling African bollworm, for example, was costly and the pest caused losses in cotton farming.

This list is expected to keep growing even though in most African countries the cultivation of GMOs has experienced protracted delays through regulatory, political and social blockades.

Why did Kenya ban GMOs? What has changed?

Kenya banned GM crops in 2012. The ministerial statement on the ban was largely informed by a 2012 a scientific report dubbed the Séralini study that associated GMOs with cancer in rats.

Anti-GMO activists have often referred to that report and in addition presented the unknown impact of the modifications as the main reason for pushing for bans. The other issues range from fears about the effect of GMO, the mixed signals from EU about health and safety of GM foods, and the potential risk of GMOs to the environment and biodiversity.

The activists also cite the fear of possible effects of GMOs on non-target organisms and potential development of resistance to insect-pests by the GM crops. Lastly, food safety fears of GMOs remain pertinent in some parts of the continent.

The Kenyan government’s change of stance was underpinned by a number of developments. First of which was the report by a task force on genetically modified foods that resulted in proper scientific regulation and presence of a strong regulatory framework.

Another factor is the lingering drought in which over 4 million Kenyans currently face food insecurity. This may have led the government to consider more radical solutions despite opposition.

The government has decided to review each application for introduction of GMOs on a case-by-case basis.

What could go wrong? And what mitigation plans are there?

There are three main concerns about what could go wrong with GMOs. These are unintended harmful effects, food safety, environmental safety and social attitudes, including fears that GMOs are a case of “man playing God”.

There is also the concern of unintended harmful effects of GMOs on the environment. In anticipation of these risks, scientists working in the field of GMO have created a raft of regulations. These regulations aim to evaluate whether GMOs are just as safe to humans and the environment as their conventional counterparts before they can be accepted for commercialisation.

Food safety: Food safety studies including tests of allergenicity (the ability of an antigen to induce an abnormal immune response) are a mandatory requirement for commercialisation of GMOs. Countries have also instituted biosafety authorities with a mandate to regulate the development and commercialisation of GMOs.

Environmental safety: An international agreement provides a framework for handling, transport and use of GMOs. It provides a clear road-map for evaluation of the impact of GMOs on the environment. It has instituted the practice of post release monitoring and evaluation for 10 years or more after the release of a GM crop.

The potential development of weeds that can resist one or more specific herbicides – so-called super weeds – is a case in point. Herbicide tolerance has helped farmers to control weeds and significantly reduce cost of GM crop production. This is because crops can be genetically modified to confer resistance to common herbicides, such as glyphosate. There is a chance however that farmers can over-rely on this technique of weed control to the detriment of the weeds developing resistance.

The potential for such resistance must be closely monitored. In Kenya, it would fall upon county governments through the extension officers to report any early cases – and to take action – if there are any potential signs of resistance. The aim should be to use multiple approaches to weeds and pest control also referred to as integrated pest managanent systems.

Socio-cultural aspects: The government must make every effort to address people’s concerns about GMOs. This includes pointing out that humans have modified crops for thousands of years. GM foods have now been grown and consumed for over 20 years in different countries. There is so far no scientific evidence to confirm any of the fears. GM crops have been evaluated to be just as safe for human consumption and to the environment as conventional crops.

About the Author:

Benard Odhiambo Oloo, Lecturer of Food Science and Technology, Department of Dairy and Food Science and Technology., Egerton University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Opinions Soft Commodities

23 Oct

Sugar and Soybean Oil bets top Speculator Soft Commodity Markets

By InvestMacro

Here are the latest charts and statistics for the Commitment of Traders (COT) reports data published by the Commodities Futures Trading Commission (CFTC).

The latest COT data is updated through Tuesday October 18th and shows a quick view of how large traders (for-profit speculators and commercial entities) were positioned in the futures markets.

Sugar and Soybean Oil top Weekly Speculator Changes

The COT soft commodities speculator bets were slightly lower this week as five out of the eleven soft commodities markets we cover had higher positioning this week while the other six markets had decreases in contracts.

Leading the gains for soft commodities markets was Sugar (25,297 contracts) with Soybean Oil (18,444 contracts), Lean Hogs (7,948 contracts), Soybean Meal (2,531 contracts) and Live Cattle (1,991 contracts) also showing positive weeks.

The softs market leading the declines in speculator bets this week was Coffee (-21,311 contracts) with Corn (-12,702 contracts), Cotton (-3,338 contracts), Cocoa (-2,468 contracts), Wheat (-1,551 contracts) and Soybeans (-1,086 contracts) also registering lower bets on the week.

Highlighting the COT soft commodities data this week was the speculator positions in Sugar. The large speculative position for Sugar has risen sharply for two straight weeks and has advanced in seven out of the past ten weeks. This trader bullishness has brought a gain of +100,347 contracts over just the last ten-week period and pushed overall bullish standing back above the +100,000 net contract level for the first time since July.

Sugar prices and sentiment have been boosted higher by lower production numbers and higher prices out of Europe as well as Brazil this year. Prices closed this week around the 18.40 level and have been in a range between 17 and 20.70 since July of 2021.

Data Snapshot of Commodity Market Traders | Columns Legend

Oct-18-2022	OI	OI-Index	Spec-Net	Spec-Index	Com-Net	COM-Index	Smalls-Net	Smalls-Index
WTI Crude	1,454,431	0	251,545	11	-273,757	90	22,212	37
Gold	434,701	1	76,956	8	-90,030	91	13,074	12
Silver	136,055	9	1,267	15	-9,085	87	7,818	8
Copper	178,730	17	-20,302	20	19,696	82	606	29
Palladium	6,805	4	-1,209	16	1,444	82	-235	30
Platinum	53,728	11	8,494	21	-11,632	81	3,138	10
Natural Gas	963,792	3	-154,734	32	126,760	71	27,974	46
Brent	163,296	11	-41,847	41	38,681	58	3,166	52
Heating Oil	283,702	29	24,555	79	-44,031	24	19,476	66
Soybeans	714,532	30	54,683	30	-30,595	77	-24,088	30
Corn	1,419,087	22	312,419	70	-249,255	36	-63,164	7
Coffee	196,729	9	19,223	53	-21,605	52	2,382	24
Sugar	711,664	4	126,412	63	-164,671	37	38,259	55
Wheat	309,429	10	-3,541	14	10,534	75	-6,993	74

Soybean Meal leads Strength Scores

Strength Scores (a normalized measure of Speculator positions over a 3-Year range, from 0 to 100 where above 80 is extreme bullish and below 20 is extreme bearish) showed that Soybean Meal (82.7 percent) and the XXXX lead the soft commodity markets and remains in a bullish extreme position (above 80 percent). Corn (69.9 percent) and Sugar (62.5 percent) come in as the next highest soft commodity markets in strength scores.

On the downside, Wheat (14.4 percent) comes in at the lowest strength level currently and is a bearish extreme level (below 20 percent).

Strength Statistics:
Corn (69.9 percent) vs Corn previous week (71.6 percent)
Sugar (62.5 percent) vs Sugar previous week (57.3 percent)
Coffee (52.5 percent) vs Coffee previous week (72.1 percent)
Soybeans (30.2 percent) vs Soybeans previous week (30.5 percent)
Soybean Oil (55.4 percent) vs Soybean Oil previous week (42.7 percent)
Soybean Meal (82.7 percent) vs Soybean Meal previous week (81.3 percent)
Live Cattle (31.6 percent) vs Live Cattle previous week (29.1 percent)
Lean Hogs (36.3 percent) vs Lean Hogs previous week (27.6 percent)
Cotton (35.3 percent) vs Cotton previous week (37.7 percent)
Cocoa (27.9 percent) vs Cocoa previous week (30.4 percent)
Wheat (14.4 percent) vs Wheat previous week (16.5 percent)

Strength Trends led by Soybean Oil and Sugar

Strength Score Trends (or move index, calculates the 6-week changes in strength scores) show that Soybean Oil (18.9 percent) leads the past six weeks trends for soft commodity markets this week. Sugar (14.1 percent), Wheat (8.1 percent), Cocoa (6.7 percent) and Corn (3.3 percent) fill out the other positive movers in the latest trends data.

Live Cattle (-26.5 percent) and Coffee (-25.7 percent) lead the downside trend scores currently while the next market with lower trend scores was Cotton (-13.2 percent) followed by Lean Hogs (-10.1 percent).

Strength Trend Statistics:
Corn (3.3 percent) vs Corn previous week (5.3 percent)
Sugar (14.1 percent) vs Sugar previous week (7.9 percent)
Coffee (-25.7 percent) vs Coffee previous week (-7.5 percent)
Soybeans (-8.2 percent) vs Soybeans previous week (-8.5 percent)
Soybean Oil (18.9 percent) vs Soybean Oil previous week (2.7 percent)
Soybean Meal (-4.5 percent) vs Soybean Meal previous week (-10.9 percent)
Live Cattle (-26.5 percent) vs Live Cattle previous week (-25.2 percent)
Lean Hogs (-10.1 percent) vs Lean Hogs previous week (-26.2 percent)
Cotton (-13.2 percent) vs Cotton previous week (-11.6 percent)
Cocoa (6.7 percent) vs Cocoa previous week (5.3 percent)
Wheat (8.1 percent) vs Wheat previous week (12.4 percent)

Individual Soft Commodities Markets:

CORN Futures:

The CORN large speculator standing this week came in at a net position of 312,419 contracts in the data reported through Tuesday. This was a weekly decline of -12,702 contracts from the previous week which had a total of 325,121 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish with a score of 69.9 percent. The commercials are Bearish with a score of 36.4 percent and the small traders (not shown in chart) are Bearish-Extreme with a score of 6.7 percent.

CORN Futures Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	30.9	44.8	8.9
– Percent of Open Interest Shorts:	8.8	62.3	13.3
– Net Position:	312,419	-249,255	-63,164
– Gross Longs:	437,906	635,253	126,283
– Gross Shorts:	125,487	884,508	189,447
– Long to Short Ratio:	3.5 to 1	0.7 to 1	0.7 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	69.9	36.4	6.7
– Strength Index Reading (3 Year Range):	Bullish	Bearish	Bearish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	3.3	-2.6	-4.2

SUGAR Futures:

The SUGAR large speculator standing this week came in at a net position of 126,412 contracts in the data reported through Tuesday. This was a weekly increase of 25,297 contracts from the previous week which had a total of 101,115 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish with a score of 62.5 percent. The commercials are Bearish with a score of 37.3 percent and the small traders (not shown in chart) are Bullish with a score of 55.2 percent.

SUGAR Futures Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	28.9	48.1	11.8
– Percent of Open Interest Shorts:	11.1	71.2	6.4
– Net Position:	126,412	-164,671	38,259
– Gross Longs:	205,568	342,150	83,657
– Gross Shorts:	79,156	506,821	45,398
– Long to Short Ratio:	2.6 to 1	0.7 to 1	1.8 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	62.5	37.3	55.2
– Strength Index Reading (3 Year Range):	Bullish	Bearish	Bullish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	14.1	-19.6	42.1

COFFEE Futures:

The COFFEE large speculator standing this week came in at a net position of 19,223 contracts in the data reported through Tuesday. This was a weekly reduction of -21,311 contracts from the previous week which had a total of 40,534 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish with a score of 52.5 percent. The commercials are Bullish with a score of 52.4 percent and the small traders (not shown in chart) are Bearish with a score of 24.4 percent.

COFFEE Futures Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	20.9	51.5	4.6
– Percent of Open Interest Shorts:	11.1	62.4	3.4
– Net Position:	19,223	-21,605	2,382
– Gross Longs:	41,151	101,222	9,017
– Gross Shorts:	21,928	122,827	6,635
– Long to Short Ratio:	1.9 to 1	0.8 to 1	1.4 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	52.5	52.4	24.4
– Strength Index Reading (3 Year Range):	Bullish	Bullish	Bearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	-25.7	26.5	2.9

SOYBEANS Futures:

The SOYBEANS large speculator standing this week came in at a net position of 54,683 contracts in the data reported through Tuesday. This was a weekly lowering of -1,086 contracts from the previous week which had a total of 55,769 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 30.2 percent. The commercials are Bullish with a score of 77.3 percent and the small traders (not shown in chart) are Bearish with a score of 30.4 percent.

SOYBEANS Futures Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	18.5	54.5	7.1
– Percent of Open Interest Shorts:	10.8	58.8	10.5
– Net Position:	54,683	-30,595	-24,088
– Gross Longs:	132,144	389,695	50,829
– Gross Shorts:	77,461	420,290	74,917
– Long to Short Ratio:	1.7 to 1	0.9 to 1	0.7 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	30.2	77.3	30.4
– Strength Index Reading (3 Year Range):	Bearish	Bullish	Bearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	-8.2	6.3	10.7

SOYBEAN OIL Futures:

The SOYBEAN OIL large speculator standing this week came in at a net position of 76,323 contracts in the data reported through Tuesday. This was a weekly boost of 18,444 contracts from the previous week which had a total of 57,879 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish with a score of 55.4 percent. The commercials are Bearish with a score of 42.7 percent and the small traders (not shown in chart) are Bullish with a score of 70.2 percent.

SOYBEAN OIL Futures Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	26.0	45.1	9.1
– Percent of Open Interest Shorts:	7.2	67.6	5.3
– Net Position:	76,323	-91,542	15,219
– Gross Longs:	105,679	183,264	36,918
– Gross Shorts:	29,356	274,806	21,699
– Long to Short Ratio:	3.6 to 1	0.7 to 1	1.7 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	55.4	42.7	70.2
– Strength Index Reading (3 Year Range):	Bullish	Bearish	Bullish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	18.9	-22.8	33.0

SOYBEAN MEAL Futures:

The SOYBEAN MEAL large speculator standing this week came in at a net position of 99,132 contracts in the data reported through Tuesday. This was a weekly boost of 2,531 contracts from the previous week which had a total of 96,601 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish-Extreme with a score of 82.7 percent. The commercials are Bearish-Extreme with a score of 19.5 percent and the small traders (not shown in chart) are Bullish with a score of 52.0 percent.

SOYBEAN MEAL Futures Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	32.1	41.0	13.0
– Percent of Open Interest Shorts:	5.5	73.8	6.9
– Net Position:	99,132	-122,110	22,978
– Gross Longs:	119,484	152,664	48,567
– Gross Shorts:	20,352	274,774	25,589
– Long to Short Ratio:	5.9 to 1	0.6 to 1	1.9 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	82.7	19.5	52.0
– Strength Index Reading (3 Year Range):	Bullish-Extreme	Bearish-Extreme	Bullish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	-4.5	2.4	17.9

LIVE CATTLE Futures:

The LIVE CATTLE large speculator standing this week came in at a net position of 41,656 contracts in the data reported through Tuesday. This was a weekly gain of 1,991 contracts from the previous week which had a total of 39,665 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 31.6 percent. The commercials are Bullish with a score of 55.6 percent and the small traders (not shown in chart) are Bullish-Extreme with a score of 98.4 percent.

LIVE CATTLE Futures Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	32.4	36.3	12.7
– Percent of Open Interest Shorts:	16.5	52.4	12.5
– Net Position:	41,656	-42,115	459
– Gross Longs:	85,057	95,288	33,243
– Gross Shorts:	43,401	137,403	32,784
– Long to Short Ratio:	2.0 to 1	0.7 to 1	1.0 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	31.6	55.6	98.4
– Strength Index Reading (3 Year Range):	Bearish	Bullish	Bullish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	-26.5	24.4	13.9

LEAN HOGS Futures:

The LEAN HOGS large speculator standing this week came in at a net position of 27,089 contracts in the data reported through Tuesday. This was a weekly advance of 7,948 contracts from the previous week which had a total of 19,141 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 36.3 percent. The commercials are Bullish with a score of 69.8 percent and the small traders (not shown in chart) are Bullish with a score of 59.7 percent.

LEAN HOGS Futures Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	37.4	36.6	10.0
– Percent of Open Interest Shorts:	23.1	47.2	13.7
– Net Position:	27,089	-19,993	-7,096
– Gross Longs:	70,919	69,501	18,957
– Gross Shorts:	43,830	89,494	26,053
– Long to Short Ratio:	1.6 to 1	0.8 to 1	0.7 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	36.3	69.8	59.7
– Strength Index Reading (3 Year Range):	Bearish	Bullish	Bullish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	-10.1	11.1	-0.8

COTTON Futures:

The COTTON large speculator standing this week came in at a net position of 32,563 contracts in the data reported through Tuesday. This was a weekly reduction of -3,338 contracts from the previous week which had a total of 35,901 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 35.3 percent. The commercials are Bullish with a score of 66.6 percent and the small traders (not shown in chart) are Bearish with a score of 21.1 percent.

COTTON Futures Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	29.9	50.2	5.4
– Percent of Open Interest Shorts:	16.3	64.5	4.7
– Net Position:	32,563	-34,238	1,675
– Gross Longs:	71,299	119,480	12,911
– Gross Shorts:	38,736	153,718	11,236
– Long to Short Ratio:	1.8 to 1	0.8 to 1	1.1 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	35.3	66.6	21.1
– Strength Index Reading (3 Year Range):	Bearish	Bullish	Bearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	-13.2	15.9	-35.4

COCOA Futures:

The COCOA large speculator standing this week came in at a net position of 11,218 contracts in the data reported through Tuesday. This was a weekly fall of -2,468 contracts from the previous week which had a total of 13,686 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 27.9 percent. The commercials are Bullish with a score of 75.2 percent and the small traders (not shown in chart) are Bearish-Extreme with a score of 8.7 percent.

COCOA Futures Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	31.7	46.2	4.0
– Percent of Open Interest Shorts:	28.0	50.3	3.6
– Net Position:	11,218	-12,445	1,227
– Gross Longs:	95,953	140,015	12,138
– Gross Shorts:	84,735	152,460	10,911
– Long to Short Ratio:	1.1 to 1	0.9 to 1	1.1 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	27.9	75.2	8.7
– Strength Index Reading (3 Year Range):	Bearish	Bullish	Bearish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	6.7	-5.2	-15.4

WHEAT Futures:

The WHEAT large speculator standing this week came in at a net position of -3,541 contracts in the data reported through Tuesday. This was a weekly reduction of -1,551 contracts from the previous week which had a total of -1,990 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish-Extreme with a score of 14.4 percent. The commercials are Bullish with a score of 74.6 percent and the small traders (not shown in chart) are Bullish with a score of 74.1 percent.

WHEAT Futures Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	27.8	40.6	8.7
– Percent of Open Interest Shorts:	28.9	37.2	10.9
– Net Position:	-3,541	10,534	-6,993
– Gross Longs:	86,038	125,771	26,783
– Gross Shorts:	89,579	115,237	33,776
– Long to Short Ratio:	1.0 to 1	1.1 to 1	0.8 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	14.4	74.6	74.1
– Strength Index Reading (3 Year Range):	Bearish-Extreme	Bullish	Bullish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	8.1	-4.5	-16.0

Article By InvestMacro – Receive our weekly COT Newsletter

*COT Report: The COT data, released weekly to the public each Friday, is updated through the most recent Tuesday (data is 3 days old) and shows a quick view of how large speculators or non-commercials (for-profit traders) were positioned in the futures markets.

The CFTC categorizes trader positions according to commercial hedgers (traders who use futures contracts for hedging as part of the business), non-commercials (large traders who speculate to realize trading profits) and nonreportable traders (usually small traders/speculators) as well as their open interest (contracts open in the market at time of reporting). See CFTC criteria here.

19 Oct

Towards zero hunger in Africa: 5 steps to achieve food security

By Edward Mabaya, Cornell University; Robert B. Richardson, Michigan State University, and Thomas Jayne, Michigan State University

Global food systems have been battered by overlapping crises in recent years. Key among these are the COVID-19 pandemic, the Russo-Ukraine war and extreme weather events resulting from climate change. These have resulted in forced migration, loss of employment, climate stress, loss of biodiversity, and economic instability.

In Africa, which is home to 1.5 billion people, these shocks and stressors have slowed – or even reversed – decades of progress in improving food security and nutrition. For example, 37 million people in the Greater Horn of Africa are facing acute hunger in one of the region’s worst droughts in decades.

These multiple crises have forced the world to recognise that improving nutrition and food security requires more resilient global and national food systems. Food systems are the sum of actors and interactions along the food value chain – from input supply and production to transport, processing, retailing, wholesaling, preparation, consumption and disposal.

As set out in the Sustainable Development Goals (SDG2), the journey towards food and nutritional security for Africa has a clear destination – zero hunger. The target is to ensure access to safe, nutritious and sufficient food for all people by 2030.

The recently launched Africa Agriculture Status Report examines the continent’s progress towards food and nutritional security.

We co-edited the report, which has six key themes. It charts a roadmap to get to the goal faster while adapting to a changing environment. Our report coincided with World Food Day 2022, whose theme is safer food, better health.

Without transformative change like the Asian Green Revolution, African food systems will continue to impede human development. They will also continue to be overly dependent on food imports. Without a strong drive for sustainable agricultural practices, the continent’s food systems will worsen environmental destruction. Urgent action is needed to anticipate megatrends, rally political will, mobilise investments and strengthen capacity.

Five ways to transform African food systems

The need for true cost accounting

Development practitioners working in Africa need true cost accounting for our food systems. It should explicitly consider all the environmental, social and human health outcomes associated with the way food systems are organised. For example, 74% of agricultural production growth in sub-Saharan Africa since 2000 has been achieved through area expansion and only 26% from increased yields. This is far from ideal. Reliance on area expansion has converted forests and grasslands into cropland on a massive scale. The result has been substantial damage to the region’s stock of natural resources and ecosystem services.

A true cost accounting framework sets out the costs of this approach. It would lead to the recognition that technical innovation is important to improve yields on existing farmland. It would show that this is a more sustainable approach to production growth, better health and improved nutrition.

Anticipate the megatrends

African governments must be prepared for the big demographic, economic, environmental, and social trends shaping the continent’s food systems. These include:

rapid population growth, associated land scarcity and rapidly rising land prices
rapidly growing demand for food, driven by rapidly growing urban areas, rising incomes and purchasing power
more frequent and intense weather disruptions associated with climate change
global health crises, economic disruptions, and civil conflicts such as the Russo-Ukraine war
technical innovation in digital agriculture.

Africa’s food systems continue to evolve in response to these drivers. Food policies and investment strategies need to change too. We are chasing a moving target.

Role of leadership

Leadership is essential to harness collective effort, shared responsibility, stakeholder engagement and political will to transform food systems.

Political leaders can either push the accelerator or step on the brakes. The complex nature of our food systems requires that key actors, including national governments, international agencies, civil society, farmer organisations and the private sector, work together towards the common goal.

Governments and regional bodies are at the centre of food systems interventions.

Investment gap

Financing is the fuel needed to accelerate transformation. Based on recent estimates from New Growth International, a network based management consulting firm, food systems transformation in Africa requires up to US$77 billion a year from the public sector and up to US$180 billion from the private sector.

Mobilising financing at scale requires African governments to:

define priorities
commit to financing priority actions
enhance coordination between government and private sector
ensure good governance and accountability.

Capacities and capabilities

Africa must invest in domestic human, institutional and system-wide capacities and capabilities. Capacity development efforts should be guided by seven core principles: country ownership and leadership; alignment with national needs and priorities; use of national systems and local expertise; no “one-size-fits-all” tactics; multi-level approaches; and mutual accountability.

We also note that even though agricultural research capacity has increased by 90% between 2000 and 2016 there has been a decline in public investment in agricultural research systems. This threatens Africa’s capacity to adapt the latest technologies to local conditions.

Call to action

There’s an urgency to transforming African and global food systems to make them more resilient and sustainable. Failure is not an option.

Transformation will require a coordinated approach from governments, development partners, the private sector and civil society. It is time to put into action the carefully designed strategies, policy reforms and investment plans highlighted in the latest report.

About the Author:

Edward Mabaya, Research Professor, Cornell University; Robert B. Richardson, Professor of Sustainable Development, Michigan State University, and Thomas Jayne, MSU Foundation Professor, Agricultural, Food and Resource Economics, Michigan State University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Opinions Soft Commodities

19 Oct

Global warming puts Arabica coffee at risk, and we’re barrelling towards a crucial threshold

By Jarrod Kath, University of Southern Queensland and Scott Power, University of Southern Queensland

Coffee may be a major casualty of a hotter planet. Even if currently declared commitments to reduce emissions are met, our new research suggests coffee production will still rapidly decline in countries accounting for 75% of the world’s Arabica coffee supply.

Arabica coffee (Coffea arabica) is one of two main plant species we harvest coffee beans from. The plant evolved in the high-altitude tropics of Ethiopia, and is hypersensitive to changes in the climate.

Our research shows there are global warming thresholds beyond which Arabica coffee production plummets. This isn’t just bad news for coffee lovers – coffee is a multi-billion dollar industry supporting millions of farmers, most in developing countries.

If we manage to keep global warming below 2℃ this century, then producers responsible for most global Arabica supply will have more time to adapt. If we don’t, we could see crashes in Arabica productivity, interruptions to supply, and price hikes on our daily cup.

Jason Betz/Unsplash, CC BY

Where our coffee comes from

Most of our Arabica is grown in the tropics, throughout Latin America, Central and East Africa and parts of Asia. Brazil, Colombia and Ethiopia are the world’s top three producers of Arabica, and the crop has crucial social and economic importance elsewhere, too.

Millions of farmers, mostly in the developing world, depend on productive Arabica for their livelihood. If coffee productivity declines, the economic consequences for farmers, some of which do not earn a living income as it is, are dire.

Arabica coffee is typically most productive in cool high elevation tropical areas with a local annual temperature of 18-23℃.
Higher temperatures and drier conditions invariably lead to declines in yield.

Last year, for example, one of the worst droughts in Brazil’s history saw coffee production there drop by around one-third, with global coffee prices spiking as a result.

What we found

Previous research has focused on how changes in temperature and rainfall affect coffee yields. While important, temperature and rainfall aren’t the best indicators of global Arabica coffee productivity. Instead, we found that it’s more effective to measure how dry and hot the air is, which we can do using “Vapour Pressure Deficit”.

Vapour pressure deficit tells us how much water gets sucked out of a plant. Think of when you walk outside on a hot, dry day and your lips dry and crack – the moisture is being sucked out of you because outside, the vapour pressure deficit is high. It’s the same for plants.

We built scientific models based on climate data that was linked to decades of coffee productivity data across the most important Arabica producing countries. We found once vapour pressure deficit gets to a critical point, then Arabica coffee yields fall sharply.

Coffee crops have crucial social and economic importance.
Yanapi Senaud/Unsplash, CC BY

This critical point, we found, is 0.82 kilopascals (a unit of pressure, calculated from temperature and humidity). After this point, Arabica yields start falling fast – a loss of around 400 kilograms per hectare, which is 50% lower than the long-term global average.

Vapour pressure deficit thresholds have already been exceeded in Kenya, Mexico and Tanzania.

Unabated global warming will see the world’s coffee producing powerhouses at risk. If global warming temperatures increase from 2℃ to 3℃, then
Peru, Honduras, Venezuela, Ethiopia, Nicaragua, Colombia and Brazil –
together accounting for 81% of global supply – are much more likely to pass the vapour pressure deficit threshold.

What can we do about it?

While there are ways farmers and the coffee industry can adapt, the viability of applying these on a global scale is highly uncertain.

For example, irrigating coffee crops could be an option, but this costs money – money many coffee farmers in developing countries don’t have. What’s more, it may not always be effective as high vapour pressure deficits can still inflict damage, even in well-watered conditions.

Another option could be switching to other coffee species. But again, this is fraught. For example, robusta coffee (Coffea canephora) – the other main species of production coffee – is also sensitive to temperature rises. Others, such as Coffea stenophylla and Coffea liberica could be tested, but their production viability at large scales under climate change is unknown.

There is only so much adapting we can do. Our research provides further impetus, if we needed any, to cut net global greenhouse gas emissions.

Limiting global warming in accordance with the Paris Agreement is our best option to ensure we can all keep enjoying coffee. More importantly, keeping global warming below 2℃ is the best way to ensure the millions of vulnerable farmers who grow coffee globally have a livelihood that supports them and their families well into the future.

About the Author:

Jarrod Kath, Senior Lecturer in Ecology and Conservation, University of Southern Queensland and Scott Power, Director, Centre for Applied Climate Sciences, University of Southern Queensland

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Financial News Soft Commodities

15 Oct

COT Soft Commodities Speculator positions led by jump in Sugar bullish bets

By InvestMacro

Here are the latest charts and statistics for the Commitment of Traders (COT) reports data published by the Commodities Futures Trading Commission (CFTC).

The latest COT data is updated through Tuesday October 11th and shows a quick view of how large traders (for-profit speculators and commercial entities) were positioned in the futures markets.

Weekly Speculator Changes led by jump in Sugar bets

The COT soft commodities speculator bets were overall lower this week as just three out of the eleven soft commodities markets we cover had higher positioning this week while the other eight markets had decreases in contracts.

Leading the gains for soft commodities markets was Sugar (54,028 contracts) with Corn (20,159 contracts) and Cocoa (13,522 contracts) also showing positive weeks.

The softs market leading the declines in speculator bets this week was Soybeans (-10,988 contracts) with Soybean Meal (-9,321 contracts), Wheat (-7,614 contracts), Lean Hogs (-4,461 contracts), Live Cattle (-3,453 contracts), Soybean Oil (-2,165 contracts), Coffee (-1,617 contracts) and Cotton (-1,578 contracts) all having lower bets on the week.

Highlighting this week’s COT softs data was the jump in speculator bets for Sugar. This week’s speculator positions rose by over +54,000 contracts and the position has now risen in six of the past nine weeks (total gain of +75,050 contracts in that period). This bullishness has now pushed the overall Sugar net speculator standing (+101,115 contracts) to the most bullish level of the past twelve weeks, dating back to July 19th. Sugar prices trade near their highest levels since 2017 as production issues and tight supply keeps the market buoyant.

Data Snapshot of Commodity Market Traders | Columns Legend

Oct-11-2022	OI	OI-Index	Spec-Net	Spec-Index	Com-Net	COM-Index	Smalls-Net	Smalls-Index
WTI Crude	1,499,498	3	259,220	13	-283,626	88	24,406	41
Gold	431,395	0	94,420	14	-103,728	87	9,308	3
Silver	125,623	0	7,389	22	-15,603	80	8,214	10
Copper	167,449	8	-15,899	24	16,903	80	-1,004	19
Palladium	6,890	5	-754	19	810	79	-56	41
Platinum	52,435	9	5,928	17	-8,690	85	2,762	5
Natural Gas	974,468	5	-162,103	30	130,099	72	32,004	56
Brent	163,113	11	-41,888	41	38,882	58	3,006	50
Heating Oil	275,262	25	19,423	71	-38,448	30	19,025	64
Soybeans	694,960	26	55,769	30	-30,614	77	-25,155	29
Corn	1,408,939	20	325,121	72	-258,225	35	-66,896	5
Coffee	188,198	3	40,534	73	-43,359	30	2,825	29
Sugar	687,209	0	101,115	57	-135,145	43	34,030	50
Wheat	307,901	9	-1,990	16	8,705	72	-6,715	76

Strength Scores led by Soybean Meal, Coffee and Corn

Strength Scores (a normalized measure of Speculator positions over a 3-Year range, from 0 to 100 where above 80 is extreme bullish and below 20 is extreme bearish) showed that Soybean Meal (81.3 percent), Coffee (73.1 percent) and Corn (71.6 percent) lead the soft commodity markets this week. Soybean Meal remains in a bullish extreme position (above 80 percent). Sugar (57.4 percent) comes in as the only other soft commodity markets above 50 percent in strength scores.

On the downside, Wheat (16.5 percent) comes in at the lowest strength level currently and is in a bearish extreme position (below 20 percent).

Strength Statistics:
Corn (71.6 percent) vs Corn previous week (69.0 percent)
Sugar (57.4 percent) vs Sugar previous week (46.3 percent)
Coffee (73.1 percent) vs Coffee previous week (74.6 percent)
Soybeans (30.5 percent) vs Soybeans previous week (33.9 percent)
Soybean Oil (42.7 percent) vs Soybean Oil previous week (44.2 percent)
Soybean Meal (81.3 percent) vs Soybean Meal previous week (86.4 percent)
Live Cattle (29.1 percent) vs Live Cattle previous week (33.4 percent)
Lean Hogs (27.6 percent) vs Lean Hogs previous week (32.5 percent)
Cotton (37.7 percent) vs Cotton previous week (38.9 percent)
Cocoa (30.4 percent) vs Cocoa previous week (17.0 percent)
Wheat (16.5 percent) vs Wheat previous week (26.4 percent)

Strength Trends led by Wheat this week

Strength Score Trends (or move index, calculates the 6-week changes in strength scores) show that Wheat (12.4 percent) leads the past six weeks trends for soft commodity markets this week. Sugar (7.9 percent), Corn (5.3 percent) and Cocoa (5.3 percent) fill out the next top movers in the latest trends data.

Lean Hogs (-26.2 percent) and Live Cattle (-25.2 percent) lead the downside trend scores currently while the next market with lower trend scores was Cotton (-11.6 percent) followed by Soybean Meal (-10.9 percent).

Strength Trend Statistics:
Corn (5.3 percent) vs Corn previous week (5.3 percent)
Sugar (7.9 percent) vs Sugar previous week (-2.3 percent)
Coffee (-7.2 percent) vs Coffee previous week (3.1 percent)
Soybeans (-8.5 percent) vs Soybeans previous week (-6.5 percent)
Soybean Oil (2.7 percent) vs Soybean Oil previous week (9.3 percent)
Soybean Meal (-10.9 percent) vs Soybean Meal previous week (-6.5 percent)
Live Cattle (-25.2 percent) vs Live Cattle previous week (-23.8 percent)
Lean Hogs (-26.2 percent) vs Lean Hogs previous week (-30.3 percent)
Cotton (-11.6 percent) vs Cotton previous week (-10.2 percent)
Cocoa (5.3 percent) vs Cocoa previous week (1.3 percent)
Wheat (12.4 percent) vs Wheat previous week (18.1 percent)

Individual Markets: