ADMIS News
COCOA
December cocoa sold off sharply overnight and is close to testing the June 15 low. The lowest consumer confidence reading in 16 months yesterday and a selloff in equity markets have underscored the cocoa market’s concerns about demand. There are bullish supply factors that can help underpin prices at times, with prospects for lower West African production this season. Steep declines in the Euro and the British pound yesterday and a continued drift lower overnight also weighed on cocoa prices on concerns that this will affect demand in a key consumption region. However, China appears to be relaxing its COVID policy, which could spell better demand ahead.
COFFEE
Coffee continues to be pressured by near-term demand concerns. While the market has bullish supply factors to provide support, it is vulnerable to further downside price action as we head into the end of the month. The September contract extended its downside breakout to a new 4 1/2 week low on Tuesday, ending the session with a heavy loss and its fourth negative day in a row. Brazilian 2022/23 production forecasts have seen some upward revisions recently, and that has been a source of pressure on the market. This is an “on-year” for Brazil’s Arabica trees, and that normally results in a large increase from the previous season.
COTTON
December Cotton may finally be approaching an end to its massive selloff. The market was higher last night after trading inside Tuesday’s range. A second straight decline in weekly US crop conditions has elevated the concerns about the US crop. Most states showed declines last week, including Texas, which is suffering a drought. Despite recent rainfall, the soil conditions in Texas do not appear to be improving. Another supportive factor on Tuesday was the relaxation of COVID restrictions in China, which gave boost to their economic outlook and could spell improvement for demand. China has been the biggest buyer of US cotton this year.
SUGAR
Sugar prices have been under pressure for the past three weeks and remain close to Monday’s 3 1/2 month low. A rebound in energy prices and recent bullish supply news lends support, but talk that India may allow exports to resume could pressure the market today. October sugar was able to build onto early strength on Tuesday and posted a moderate gain for the session. Rallies in crude oil and RBOB gasoline provided support on ideas it would strengthen ethanol demand in Brazil and India.
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