ADMIS News
COFFEE
Coffee prices remain close to Tuesday’s 6-month high, but continue to see wide-sweeping daily ranges during the April rally. While the supply/demand outlook remains bullish, coffee is looking vulnerable to a near-term pullback. The Brazilian currency lost more than 1% in value and reached a 1-week low, which put carryover pressure on the coffee market as extended currency weakness may encourage Brazil’s farmers to market their coffee to foreign customers. A negative shift in global risk sentiment also weighed on coffee prices late in the day as that may weaken out-of-home consumption prospects.
COCOA
Cocoa prices have been able to extend their March/April rally further into new high ground as the market continues to be underpinned by bullish supply developments. There are major demand gauges expected to come out during the next few sessions and if there are no negative surprises from that data, cocoa prices should maintain upside momentum. Although the latest Euro zone CPI was in-line with trade forecasts, the year-over-year rate had a 1.6% decline from the previous month. This offset a surprising high UK CPI result and provided more evidence of a continued decline in inflation that provided support to the cocoa market.
COTTON
July cotton closed lower yesterday after failing to follow through on Tuesday’s upside breakout. The market managed to punch through Tuesday’s high early in the session, but when it faltered there, heavy selling set in and sent the market lower. A stronger dollar and weaker crude oil prices also pressured the market. The Cotton Association of India said that India’s 2022/23 cotton production will fall to its lowest level in 14 years and below domestic consumption for the second straight year. The trade will be looking to the weekly US export sales report on Thursday for direction.
SUGAR
The sugar market has seen three negative daily key reversals in the past 8 sessions that would normally result in downside follow-through. With key outside markets losing considerable strength yesterday, sugar prices could remain on the defensive. Crude oil and gasoline prices posted heavy losses which were a source of carryover pressure on the sugar market as that may weaken near-term ethanol demand. In addition, this week’s extended pullback in the Brazilian currency put additional pressure on sugar prices as that could encourage Center-South mills to keep sugar’s share of crushing near normal early season levels.
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