Cotton Rallies on Strong Export Report
March cotton rallied sharply yesterday on a strong weekly export sales report and traded to its highest level since October 27. It held those gains overnight. Traders have noted the strong pace of export sales over the past few months, and a pickup in shipments since the start of the year have reinforced ideas that global supplies may be tighter than previously thought. Yesterday’s export sales report showed US cotton sales for the week ending January 25 at 349,365 bales for the 2023/24 (current) marketing year and 25,168 for 2024/25 for a total of 374,533. Exports for the week totaled 396,711 bales, up from 142,242 the previous week and the highest since April 2023. Cumulative sales have reached 87% of the USDA forecast for the 2023/24 marketing year versus a five-year average of 83% for this point in the season.
March coffee was lower overnight, but it stayed inside yesterday’s range. A risk-on mood has provided underlying support this week, but a jump in ICE exchange stocks may make the bulls concerned as we head into the weekend, especially if today’s US jobs report is a disappointment. Concerns about dry conditions in Brazil have provided underlying support to coffee since the middle of last month, and the trade will be focused on the chances of rain there in the next couple of weeks. Honduras’ coffee exports fell 8.6% in January from a year earlier, according to the Honduran Coffee Institute (IHCAFE). Costa Rican exports fell 28% in January versus last year, according to the Coffee Institute of Costa Rica (ICAFE). They cited a smaller harvest and robust international supplies. The expect Costa Rica to export around 1.3 million bags for 2023/24, down 13% from the previous season. Robusta coffee trading in Vietnam is getting sluggish with the approach of the Lunar New Year holiday next week. Farmers there have been reluctant to sell, as they have been holding out for higher prices.
March cocoa extended yesterday’s gains overnight to trade to a new contract (and 47-year) high. The market is already expecting a third global production deficit in a row for 2023/24, and the recent hot and dry conditions in West Africa are threatening to make the supply even tighter. The dry, Harmattan winds have descended on the region, bringing temperatures above 100 degrees Fahrenheit to some areas. This is expected to damage developing pods for the upcoming mid-crop production, which runs from April to October. Forecasts call for temperatures to continue to be above normal over the next few weeks.
March sugar is in danger of breaking a four-week winning streak. Lower crude oil prices provide outside market pressure, and indications that Brazil will finish this season with a record exports have weighed on prices as well. The trade has been concerned that the drier than normal conditions in parts of Center South Brazil could affect the upcoming crop. Some areas are expected to see rain in the coming week, which could ease some of those concerns. Soil moisture levels are mixed across the region.
Interested in more futures markets? Explore our Market Dashboards here.
Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. The information and comments contained herein is provided by ADMIS and in no way should be construed to be information provided by ADM. The author of this report did not have a financial interest in any of the contracts discussed in this report at the time the report was prepared. The information provided is designed to assist in your analysis and evaluation of the futures and options markets. However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to ADMIS. Copyright ADM Investor Services, Inc.