ADMIS News
COFFEE
Coffee prices continue to see coiling action within their March consolidation zone as they have followed Monday’s 3 1/2 week high by dropping to within striking distance of an 8-week low. The negative shift in global risk sentiment may weaken out-of-home demand prospects which pressured the coffee market. The end of the La Nina weather event should benefit the production outlook in Brazil and Colombia, and that also weighed on coffee prices as they are the world’s top two Arabica growing nations. With 3 days left in March, ICE exchange coffee stocks are over 39,000 bags below their February month-end total. The inability to break out above its March consolidation leaves the market vulnerable to month-end and quarter-end profit-taking.
COCOA
Cocoa prices continue to hold their ground near multi-year highs despite a negative shift in global risk sentiment. With 3 sessions left in the month and quarter, however, cocoa remains vulnerable to profit-taking. Tight near-term West African supplies have underpinned cocoa prices, while this week’s recovery move in the Eurocurrency and British Pound provided cocoa with additional support. This season’s Ivory Coast cocoa bean exports through the end of February were 1.5% behind last season’s pace, while their cocoa products exports over that timeframe were 3% ahead of last season’s pace. The shift towards “origin” grindings has helped Ivory Coast continue to be the world’s largest cocoa processor, so their stronger cocoa product exports shows some improvement in global demand.
COTTON
May cotton gapped higher yesterday, breaking out of its recent consolidation pattern and trading to its highest level in almost three weeks. The dollar was weaker and crude oil was higher, and both these moves were supportive to cotton. Demand expectations have picked up a bit as the banking crisis has eased. The market had gotten oversold as well, leaving the market vulnerable to a short covering rally. Long-term drought conditions persist in west Texas and western Oklahoma, and this could start to weigh on the minds of traders. As of April 3, the 5-year averages show Texas 9% planted, Arizona 24%, and 0% elsewhere. Topsoil and subsoil moisture in West Texas is rated very poorly and the 1-5 day forecast calls for no rain for Northwest Texas.
SUGAR
While there have been bearish supply developments from Brazil, the world largest sugar producer, the second and third largest producers (India and the EU) will have lower production this season. Unless there are Brazilian bottlenecks overthe next few months, the global export marketplace should be well supplied. May sugar reached a new multi-year high and there is still no technical sign of a short-term peak. A 2 1/2 week high in the Brazilian currency provided the sugar market with carryover support as that will ease pressure on Brazilian mills to produce sugar for export.
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