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Cotton Market Falls Sharply


July cotton turned lower on Friday from a key resistance level, and then the market fell sharply on the session yesterday. Demand concerns persist and the market saw selling pressure from a stronger US dollar and decent weather for the cotton belt. Talk of longer-term economic concerns due to difficult negotiations on the debt ceiling was seen as a bearish factor as well. April cotton imports from China reached only 80,000 tonnes, down 51.7% from last year. Year-to-date imports fell 51.8% to just 380,000 tonnes. Cotton planted as of May 21 was up 10% at 45%. This is down 7% versus last year and down 4% versus the 10 year average.

cotton pods up close


Cocoa saw little upside follow-through from last Friday’s outside-day higher close as near-term demand concerns remain a source of headwinds for the market. The supply side outlook remains bullish, however, and that should help cocoa remain well supported on a near-term pullback. The likelihood that an El Nino weather event later this year will have a negative impact on West’s Africa’s 2023/24 cocoa production provided an early boost to prices. However, lukewarm global risk sentiment early this week has weakened the demand outlook for discretionary items such as chocolate. In addition, daily rainfall in the forecasts for West African growing areas through the end of May weighed on cocoa prices as that should improve the prospects for late harvested mid-crop beans.


Coffee prices continue to see coiling action that has kept the market from breaking out of its recent consolidation zone. Recent supply/demand news has been supportive, however, and that should help the coffee market hold its ground above the 50-day and 200-day moving averages. Tight near-term Robusta supplies continues to provide carryover support to the New York coffee market, as Vietnamese near-term stocks have been nearly depleted while Brazil’s newly harvested Robusta crop will not see sizable exports until the third quarter. Robusta futures pushed to the highest level since 2008.


Sugar prices were able to benefit from bullish supply news and a rebound in key outside markets, but the market remains well below the recent highs. Until the market receives bullish developments from Brazil, sugar remains vulnerable to a near-term pullback. The International Sugar Organization (ISO) downwardly revised their 2022/23 global production surplus forecast from 4.15 million down to 854,000 tonnes, due in large part to a reduction in global production from 180.4 million down to 177.4 million tonnes. Crude oil and RBOB gasoline were able to regain strength after the weekend, and that provided carryover support to the sugar market as it may help to improve ethanol demand, the Brazilian currency put together a moderate rebound that should ease pressure on Brazilian mills to produce sugar for export.


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