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Sugar Prices Break Losing Streak

SUGAR

Sugar prices were able to break a 5-session losing streak but they remain 2 cents below the 5 1/2 year high from late December. Crude oil and RBOB gasoline prices found significant early strength yesterday which provided carryover support. Recent trade estimates that India’s production and exports this season will come in below last season’s total provided the sugar market with some support, as that follows reports of lower than expected yields from early-harvested cane plants. India’s National Cooperative Sugar Factories Federation estimated their nation’s 2022/23 sugar production at 35.7 million tonnes which compares to 35.92 million last season. The Brazilian trade group Unica will release their latest Center-South supply report later this week which is expected to show sugar production ahead of last season’s pace. Unless energy prices climb well above their current levels, ethanol demand in Brazil and India will remain subdued.

sugar cane stalks

COFFEE

The market remains in a short-term downtrend and has closed lower for seven sessions in a row. Talk of favorable crop weather in Brazil plus increasing stocks are factors which have helped to pressure. A pullback in the Brazilian currency put carryover pressure on the coffee market, as that encourages Brazil’s producers to market their remaining coffee supply. The buildup of ICE exchange coffee stocks since late October continues to weigh on coffee prices, as they increased by 6,386 bags on Monday to reach their highest level since July. Vietnam’s customs agency said that their nation’s December coffee exports were 53.5% above November’s total, which put their 2022 exports 13.8% above their 2021 total. Although virtually all of Vietnam’s production is Robusta coffee, this surge of near-term supply has also weighed on Arabica prices.

COCOA

March had a gap-higher opening yesterday before rallying up to a new 9-month high. Nigeria’s cocoa association reduced their 2022/23 production forecast by 7.4% due to adverse weather conditions and disease, which underpinned cocoa prices early this week. Nigeria and Ghana have seen outbreaks of black pod diseases that will have a negative impact on this season’s cocoa production. In addition, sizable rallies in the Eurocurrency, British Pound and European equities provided carryover support to cocoa prices as that can help to soothe near-term demand concerns. US equity markets fell back from their midsession highs after cocoa’s close, however, and that could put early pressure on cocoa prices today trading. While their full-season total is ahead of last season’s pace, the latest weekly reading for Ivory Coast port arrivals came in below the comparable period last year. With prices reaching 9-month highs, a negative shift in global risk sentiment may trigger a wave of profit-taking and additional long liquidation.

COTTON

March cotton closed higher for the third session in a row yesterday as the technical action remains positive. Traders continue to remain optimistic that China demand will improve soon as they reopen their economy. This seems overly optimistic but with a continued drop in the US dollar and plenty of optimism in other commodity markets, speculative buyers remain active. In addition, ideas that US cotton acreage will be down sharply this coming year and a rally for crude oil added to the positive tone. For the USDA supply/demand report this week, traders see production coming in near 14.14 million bales, 13.84-14.32 range, as compared with 14.24 million bales in December.

 

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