ADMIS News
COTTON
With the Southern Hemisphere harvest proceeding, US cotton is reportedly finding stiff competition from Brazil and Australia, whose basis levels have declined recently. A strong USDA export sales report today could surprise the market and help lift it off its lows. Last week’s report showed net sales of 189,573 bales for the week ending March 7, up from 67,089 the previous week and the highest since February 1. Soil moisture conditions in US cotton growing regions are much better than they were a year ago, which improves the chances for strong plantings and a good start to this year’s crop.
COCOA
May cocoa traded to another new contract high this morning, as commercial buying continues to support. There were news stories overnight of grinders aggressively shopping for beans in Ecuador, Peru, and Indonesia as they worry that Ivory Coast and Ghana will not be able to meet their commitments. The market is facing tight supply with little relief in sight, and there his been no technical indicator of a top. Recent reports of rain reaching West Africa have been largely discounted, as it could take some time to determine the condition of the upcoming mid-crop. The dry season normally ends in late March or April. In the meantime, commercials are caught short.
COFFEE
The coffee market has been trendless since December and looks to stay that way until a new fundamental dominates the market. Global robusta supplies are tight, and this lends support to the Arabica market. Drier than normal conditions in Brazil over the past few months have raised concerns about the upcoming crop. But this is coming off a strong production year for Brazil, and steadily increasing exchange stocks for Arabica coffee point to loosening supply and possibly reduced demand. Private analysts have recently forecasted global production surpluses in 2024/25, particularly for Arabica. A bounce in the Brazilian real yesterday provided some support to coffee as that lessened the pressure on Brazilian growers to market their beans.
SUGAR
May sugar ended yesterday on a positive note after reversing higher following an early selloff to its lowest level since March 11. The market fell below a technical retracement for a brief period but appeared to reject that level and worked steadily higher for the rest of the day. This may have been a case of the market falling two far, too fast. News that the EU had reached a provisional agreement to grant Ukrainian food producers tariff-free access to its markets until June 25 may have been the culminating factor for this week’s selloff. In a positive fundamental story, broker hEDGEpoint Global Markets cut its forecast for the 2024/25 Brazil Center-South cane crop to 605 million tonnes, down from 615 million previously, due to the drier than normal conditions in the past few months.
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