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Tightening Coffee Stocks in Brazil


Coffee prices have held up fairly well during a period of turbulent action in global markets and sluggish global risk sentiment, and remain on track for a positive weekly reversal. If bullish supply factors continue to provide support, coffee prices could see a sizable upside move. Rainfall over Brazil’s major Arabica growing regions over the next few weeks put pressure on coffee prices early in the session, as that should help out with flowering for their upcoming 2023/24 coffee crop. Those areas will have a La Nina to deal with until early next year, however, as that weather event normally brings drier than normal conditions to Brazil’s coffee-growing areas. Coffee continues to see production issues in nations that account for more than half of global Arabica production.

coffee beans in hand


Cocoa prices continue to be weighed down by near-term demand concerns which have driven the market down to the lower portion of its third quarter consolidation zone. Cocoa’s West African production issues are likely to continue well into the fourth quarter, however, and that can help the market find its footing. Global risk sentiment remains subdued in the wake of Wednesday’s Fed rate hike and yesterday’s Bank of England rate hike, and that has weakened cocoa’s near-term demand prospects as their post-meeting statement indicate high inflation levels are likely to continue into early next year. In addition, both the Eurocurrency and the British Pound reached new 2022 lows which also put carryover pressure on cocoa prices as they will make it more difficult for European cocoa processors to acquire 2022/23 cocoa beans. There has been a shift toward wetter weather over West Africa’s cocoa growing region which is expected to benefit the region’s late main crop harvest.


December cotton closed slightly lower yesterday as it continued to consolidate last week’s losses. The stronger dollar continues to undercut US export prospects. The nearby dollar index reached its highest level since May 2002. Cash traders continue to complain about poor demand. The weekly export sales report was disappointing as well. The report showed US cotton export sales for the week ending September 15 at 32,432 bales for the 2022/23 (current) marketing year and 13,297 for 2023/24 for a total of 45,729. Sales have reached 66% of the USDA’s forecast for the marketing year versus a five-year average of 54%.


Sugar prices have climbed more than 80 ticks above Monday’s 13-month low and are on-course for a positive weekly reversal. A rebound in crude oil and RBOB gasoline prices provided mild carryover support to the sugar market, even though both energy markets finished Thursday well below their daily and weekly highs. Stronger energy prices should help to strengthen ethanol demand in Brazil and India, and that could lead to mills shifting some of their crushing away from sugar production. India’s Farm Ministry projected their nation’s 2022/23 cane production at a record high 465.05 million tonnes. While more of their cane is being diverted to ethanol production, India’s 2022/23 sugar production is likely to come in at or above this season’s total.

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.

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