ADMIS News
COCOA
Cocoa’s recovery move has run out of upside momentum as near-term demand concerns continue to flare-up. If global risk sentiment can turn positive again, cocoa can turn back to the upside. Asia has been widely seen as the “engine” for global cocoa demand growth over the past few years, but the region saw a minimal year-over-year decline in their first quarter grindings.
COFFEE
Coffee prices are within striking distance of new 4-month highs. Although the supply side has provided consistent support, it may be demand-side developments that lift coffee prices further to the upside. ICE exchange coffee stocks fell by 6,080 bags on Wednesday and have reached their lowest levels since January 2000. Although US green coffee stocks climbed back above 6 million bags at the end of May, the 5 ICE warehouse locations in the US (which has the coffee eligible for delivery against ICE futures contracts) were below 45,000 bags on Wednesday which is their lowest total since December 1997.
COTTON
The market remains in a steep downtrend and long liquidation seems to be a key factor. Keep in mind, large and small speculators combined still held a net long position of 79,857 contracts in the last COT update. The cotton market had another day of steep declines yesterday, with the December contract falling to its lowest price level since March 24. This was despite a sharp decline in cotton crop conditions this week, as demand destruction is a much bigger issue on traders’ minds.
SUGAR
Sugar’s inability to lift clear of last week’s low left it vulnerable to this week’s pullback. Unless it can find fresh support from key outside markets, sugar looks to be headed further to the downside. A sharp selloff in crude oil prices put carryover pressure on the sugar market as that may weaken near-term ethanol demand in both Brazil and India.
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