ADMIS News
COCOA
Cocoa continues to be pressured by sluggish global risk sentiment and multi-decade high inflation in many nations, but it appears that overall demand has been fairly resilient this season. With supply issues likely to continue into the 2022/23 season, cocoa prices may be able to retest the mid-July highs. Ongoing rainfall over West African growing areas may slow the start of the region’s 2022/23 harvest, which has provided cocoa prices with underlying support. In addition, the Eurocurrency extended its rebound to a third positive daily result in a row which provided carryover support to the cocoa market. The International Cocoa Organization (ICCO) released their latest quarterly supply/demand update, which featured 2021/22 global production being reduced by 33,000 tonnes down to 4.890 million tonnes, while 2021/22 global grindings were increased by 23,000 tonnes up to a record-high 5.071 million tonnes.
COFFEE
Coffee prices have seen tight coiling price action so far this week, but remain fairly resilient in the face of sluggish global risk sentiment and high inflation levels. The La Nina weather event will continue to cause production issues for Brazil and Colombia through year-end, and that continues to underpin coffee prices in close proximity to 6-month highs. Brazil’s largest co-op Cooxupe said that their 2022/23 harvest was 91% completed, which was slightly ahead of last year’s pace.
COTTON
December cotton closed moderately higher yesterday, but spent the day in the bottom portion of Tuesday’s range. Reuters reports that the market had its strongest month since January 2011 in August, with a 17% gain. The 1-5 day forecast calls for moderate to heavy rainfall in the southern parts of west Texas, Delta and southeast, with lesser amounts as you move north. The 6-10 and 8-14 day forecasts call for above normal chances of rain across the cotton belt. This could raise concerns about crop damage if bolls are open and would come on top of a sharply reduced crop in Texas due to their extended drought.
SUGAR
While sugar prices finished August with 3 daily losses in a row, they were still able to complete a positive monthly reversal from a 1-year low. Sluggish key outside markets may keep sugar on the defensive, but the market has bullish supply developments that can help prices find their footing. Sluggish crude oil and RBOB gasoline prices are weighing heavily on the sugar market as they are likely to erode near-term ethanol demand in Brazil and India.
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