ADMIS News
COTTON
The cotton market has gotten a boost from a tighter than expected ending stocks forecast from the USDA, but the crop is on time, and west Texas got some rain last week. July and December cotton rallied sharply yesterday as they continued to digest the supportive supply/demand report from last Friday that showed US 2023/24 cotton production and ending coming in lower than expected, with ending stocks coming in below the low end of expectations. The dollar was lower on Monday and crude oil was higher, and both were supportive to cotton.
COCOA
Cocoa prices were likely to start this week on the defensive, but the market was able to hold up fairly well to a wave of profit-taking and long liquidation. If global risk sentiment continues to improve, cocoa prices should remain fairly well supported. A shift towards drier weather over many West African growing areas weighed on cocoa prices as that may help to speed up the region’s mid-crop harvest. However, Ivory Coast port arrivals remain behind last season’s pace, which provided support to the cocoa market. A positive turnaround in US equity markets as well as moderate gains in the Eurocurrency and British Pound provided carryover support to the cocoa market as they should improve its near-term demand outlook.
COFFEE
If global risk sentiment continues to improve, coffee should be able to extend its recovery move. The USDA forecast that Guatemala’s 2023/24 coffee production will have a slight decline from this season, and coffee exports will decline 6% from this season helped to support. While there has been a rebound in Central American exports since the start of this year, the USDA said that 2022/23 Guatemalan exports will come in 10% below last season’s total which does not bode well for second and third quarter shipments from the region. Colombia’s production pace has held close to 9-year lows during the past few months, and that continues to provide underlying support. ICE exchange coffee stocks fell by 1,959 bags on Monday and have reached their lowest levels of 2023 so far.
SUGAR
Sugar prices continue to hold their ground within a fairly tight range just below their late April and early May highs. Despite a rebound in key outside markets, sugar has been unable to reach new high ground and remains vulnerable to a sizable near-term pullback. Brazil’s Center-South cane harvest and sugar production continues to be ahead of last season’s pace, and that remains a source of pressure on the sugar market. Both the Brazilian currency and energy prices were able to extend their recovery moves, which provided carryover support to the sugar market as that may help to strengthen near-term demand.
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