ADMIS News
COCOA
Cocoa prices have faced headwinds from near-term demand concerns since early 2020, with the second quarter featuring new Chinese COVID restrictions, Russia’s invasion of Ukraine and soaring prices for consumer staples around the globe. The market is starting to receive hard demand-side data that is likely to provide cocoa prices with near-term direction. New multi-year lows in the Eurocurrency and British Pound put carryover pressure on the cocoa market, as their current weakness will make it more difficult for EU and UK processors to acquire near-term cocoa supplies.
COFFEE
Coffee prices continue to have a bullish supply outlook, but are unable to avoid the concern over demand destruction that have pressured many commodities. With the market now within striking distance of a new 9-month low, coffee needs to see a significant turnaround in global risk sentiment in order to find some footing.
COTTON
December cotton closed sharply lower on Tuesday despite an ostensibly bullish USDA supply/demand report. The market was undermined by a sharply higher dollar, with the September Dollar Index trading to a new contract high and the nearby contract trading to its highest level since October 2002. Crude oil and the stock market were sharply lower, which was bearish to cotton demand. The USDA report put US 2022/23 cotton production at 15.50 million bales versus an average trade expectation of 16.03 million (range 15.25-17.31 million) and down from 16.50 million in the June report.
SUGAR
Sugar prices have held up fairly well in the face of sluggish key outside markets. With some bullish supply developments to provide support, sugar may be able to regain upside momentum over the rest of this week. A more than $8 selloff in crude oil and a more than 20 cent selloff in RBOB gasoline prices put significant carryover pressure on the sugar market, as that may weaken near-term ethanol demand.
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