ADMIS News
COCOA
Cocoa prices continue to face pressure from demand concerns from its two largest grinding regions which have kept the market from lifting decisively clear of this summer’s lows. While global risk sentiment and key outside markets saw a positive turnaround, cocoa may also need relief from current events in Europe and Asia in order to find support. The British Pound reached a new 37-year low the day after the Euro reached a 20-year low, as the extensive weakness in both currencies put carryover pressure on the cocoa market.
COFFEE
While there has been a rebound in global risk sentiment, coffee may need to receive fresh bullish supply news in order to regain upside momentum. Rainfall in the forecast for major Brazilian Arabica-growing regions has weighed on coffee prices this week, as focus shifts towards their upcoming 2022/23 “off-year” crop. The current La Nina weather event is expected to continue through the end of this year, which normally brings drier than normal conditions to Brazil’s Arabica-growing region.
COTTON
Given the serious production problems for the US and for and Pakistan, the market is likely to find support soon. A 50% correction of the July 15 to August 16 rally comes in at 101.06. Pakistan imports could jump by near 1 million bales after the flooding issues. December cotton resumed its selloff on Wednesday and fell right to the 50% retracement of the July-August rally. The dollar traded to a new contract (and 20-year high), which may have pressured cotton on ideas that a strong dollar makes US cotton exports less competitive on the world market.
SUGAR
Sugar’s coiling price action has kept the market well clear of its late August lows, which may be setting up for a breakout move of its August/September consolidation zone. With the market resilient in spite of severe weakness in key outside markets, sugar may be able to bounce but may need positive supply news to attract buyers. A massive selloff in crude oil and RBOB gasoline prices put carryover pressure on the sugar market as that weaken near-term ethanol demand in Brazil and India.
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