ADMIS News
COTTON
July cotton is hovering around five-month lows after selling off from a contract high in late February, and this has left it vulnerable to a short covering rally as we head into the growing season. Downbeat sentiment on grains, oil and financial markets pressured the market yesterday. Export prospects seem limited by the strong dollar, tight old crop ending stocks, and expected competition from Brazil. Last week’s export sales report showed US cotton sales for the week ending April 11 at 226,189 bales, up from 117,161 the previous week and the highest since February 1. If the sales come in strong again this week, it will ease concerns about a slowdown.
COFFEE
July coffee extended yesterday’s recovery move overnight, as bullish weather updates from Vietnam have pushed July robusta futures to new contract highs, lending support to the NY arabica market. Dry conditions are expected to worsen in key growing areas of Vietnam in the next 10-15 days, exacerbating concerns about the upcoming crop. Brazilian robusta production was expected to help make up for lower exports from Vietnam and Indonesia this quarter, but yields have been lower than expected for the early part of their harvest. La Nina is expected to return this summer, which could bring wetter conditions to Vietnam and Indonesia, but that is still way off in the future.
COCOA
West African supply issues are unlikely to be resolved over the near future, and that may set the stage for a fourth global production deficit in a row in 2024/25. A wetter trend in west Africa could improve prospects for late mid-crop production, but this is coming off extremely low expectations after the hot and dry conditions earlier this year. Ivory Coast cocoa arrivals for the 2023/24 marketing year reached 1.337 million tonnes as of April 21, down 28% from 1.859 million a year ago. Last week’s grind numbers indicated that demand was resilient against extremely high prices during the first quarter. Ecuador and Indonesia cocoa farmers could benefit from a shift in weather conditions if La Nina arrives as expected later this year. Their producers have been able to capture a larger portion of the price gains than their counterparts in Ivory Coast and Ghana, which provides a strong incentive to expand production.
SUGAR
July sugar was lower overnight, and it could be on its way to testing last week’s 12-month low. Trade expectations for this week’s UNICA report to show Brazilian first-half April cane crushing to come in 15% above a year ago may have made longs nervous. Hotter than normal conditions in Thailand’s cane growing regions are expected to negatively impact their upcoming 2024/25 crop. Hot and dry conditions are expected to continue for the foreseeable future. There are reports that India’s government will allow an additional 800,000 tonnes of sugar to be diverted for ethanol production. The dry weather in India could give way to higher rainfall just in time for sugarcane development.
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