ADMIS News
COFFEE
May coffee cannot seem to break out of its consolidation. After trading to its lowest level since February 27 on Tuesday, it rallied back and closed higher on the day yesterday and extended the rally overnight. The Brazilian real also bounced yesterday after trading to its lowest level since October earlier in the session, and this lent support to coffee on ideas it would reduce pressure on Brazilian producers to sell their product. The April real fell below the 200-day moving average this week, which is a long-term bearish development. ICE exchange stocks totaled 532,266 bags yesterday, up 15,588 from Monday and the highest since July 27. The steady increase in stocks is another bearish development. On Monday, Somar Meteorologia reported that rainfall in southern, southwest Minas Gerais state, Brazil’s biggest Arabica coffee growing region, totaled 6.6 millimeters last week, 16% of the historical average, and these dry conditions have been supportive.
COCOA
After another move to all-time highs this week, May cocoa is consolidating its gains. One could argue the market has reached overbought levels, but there has been no indication of a top. There have been reports of some rain reaching growing areas in West Africa, but the reports have been anecdotal and have been mixed. The rainy season usually runs from April to mid-November. Ivory Coast port arrivals totaled 37,727 tonnes for the week ending March 17, up from 27,000 last week and 21,000 a year ago. Total arrivals since the marketing year began on October 1 have reached 1.26 million tonnes, down 28% from 1.75 million for the same period last year. Supply tightness is reported to be more acute in Europe than in North America and Asia, and European chocolate manufacturers are said to be already faced with making smaller bars or finding ways to stretch their cocoa supply by developing new products that use less chocolate. The new EU import rules come into effect at the end of the year, which will make importing cocoa more complicated.
COTTON
The rally in the dollar has put pressure on the cotton market this week. The upcoming South American harvest may pull export business away from US cotton. US supplies are tight, but global supplies not so much. The trade may start to focus in the upcoming US crop, and traders may be reluctant to push too much lower ahead of the March 28 USDA Prospective Plantings report. Much improved soil moisture and a rally in cotton this winter suggest plantings could be heavier this year. The Cotton Association of India said on Tuesday that their nation’ cotton production was expected to reach 30.97 million 170-kg bales for the 2023/24 marketing year that began on October 1, up from a previous estimate of 29.41 million, a 5.3% increase. Imports were seen at 2.04 million bales, down from 2.2 million previously, and exports are expected at 2.2 million from 1.4 million estimated earlier. This suggests that India could be a net exporter of 160,000 bales versus a being a net importer of 800,000.
SUGAR
May sugar sold off hard yesterday and was slightly lower overnight. The bulls were clearly disappointed that the market was unable to follow through on its move above the 50-day moving average on Monday. Neither a strong rally in crude oil nor a bounce in the Brazilian real helped support the market yesterday. Improved outlooks for Indian production have put pressure on sugar this week. The Indian Sugar and Bio-Energy Manufacturers Association reported on Monday that as of March 15, Indian sugar production since their marketing began on October 1 had reached 28.1 million tonnes, down only slightly from the 28.3 million for the same period last year. India has also revised it cotton production higher this week, which suggests that crops experienced less damage from the poor monsoon rainfall last summer than previously thought.
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