ADMIS News
COTTON
May Cotton sold off hard overnight to new contract lows after China announced it would impose an additional 15% tariff on US agricultural goods, including cotton, in the wake of an additional 10% US tariffs on Chinese goods that went into effect today (bringing the total tariff to 20% since President Trump re-entered office). The fact that the increases announced by China are less than the ones by the US is viewed by some as an indication that China wants to leave to door open for negotiation. China has been a major buyer of US cotton in the past, but their purchases have fallen significantly over the past couple of years, as they had already switched to more Brazilian cotton in reaction to US sanctions against textiles made form cotton grown in Xinjiang. Brazil has surpassed the US as the world’s largest exporter of cotton for the past two years. China has a strong cotton crop last year as well. Recent export sales data showed as of February 20, China is stfcill the fourth-largest buyer of US cotton for 2024/25 at 797,000 bales versus 2.059 million by Pakistan, 1.968 million by Vietnam, and 1.327 million for Turkey. The dollar is lower today and has fallen to its lowest level since December on ideas the Fed’s will be more open to a rate cut in the wake of the tariffs. This offers some benefit to US exports.
COFFEE
May Coffee edged higher overnight as the weather in Brazil has shown no improvement over the short term. World Weather Service expects Brazilian coffee growing regions to see net drying the through the weekend. Some regions may see some relief next week, but concerns remain about stressed trees and threats to cherry development for the 2025 crop. There were also report this week that Brazilian farmers were basically “sold out” of their 2024 crops. ICE certified arabica stocks decreased by 13,762 bags yesterday to 791,826.
COCOA
May Cocoa gapped lower overnight and traded its lowest level since November 19 on follow-through selling in the wake of yesterday’s steep decline. The market appeared to have a delayed reaction to Friday’s ICCO report, which called for a global supply surplus in 2024/25. The report showed a modest improvement in production for 2024/25, but it also indicated had a revision higher in 2023/24 output. It also showed a drop in consumption, which allowed for a surplus of 142,000 tons versus deficits of 441,000 in 2023/24, 65,000 in 2022/23, and 216,000 in 2021/22. The stocks/grindings was forecast at 31.8%, which was up from 27.3% in 2023/24 but still the second tightest since 1984. World Weather Service said yesterday that its expects West Africa to see periodic rainfall during the next ten days. This is this time of year that seasonal rains usually increase, and that seems to be happening as expected. However, there are concerns that hot weather is causing a loss of soil moisture. Ivory Coast farmers told Reuters that more rains were needed to boost development of the mid-crop. Swiss chocolate maker Lindt said it would increase prices “in the double digit percentage range” in 2025 to offset high cocoa prices. They already increased prices by 6.3% in 2024. ICE certified stocks increased by 12,422 bags yesterday to 1.434 million, their highest since December 10.
SUGAR
May Sugar is near unchanged this morning after falling to its lowest level since February 11 overnight. The market has endured four sessions of heavy selling in anticipation of heavy deliveries against the March contract. Deliveries on Monday totaled 34,385 lots (1.74 million tons), which was the largest ever for the contract, but it was mostly in line with expectations. Green Pool commented that the delivery will likely clear out remaining stocks in Brazil, with the new harvest still weeks away. Dry weather in Brazil is raising some concerns about the upcoming crop. The new marketing year begins April 1. Recent reports of lower production out of India have failed to lift the market in the face of the heavy deliveries.
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