ADMIS News
COCOA
With three sessions left in June, the cocoa market remains on-track for a ninth positive month in a row, but with the funds loaded up on the long side and a short-term overbought condition, the market is vulnerable to a pullback. Recent heavy rainfall in West Africa has disrupted this year’s midcrop harvest, and more rains in the forecast this week have helped lift September cocoa to new contract highs. The rally in the Euro yesterday may have lent support as well on ideas it could help put European processors in a posture to buy cocoa. Stubborn European consumer inflation has raised concern about demand for discretionary items such as chocolate.
COFFEE
September coffee got some bullish news this week from lower production in Colombia but got only a minor lift off that news. The market is short-term oversold, but Brazil’s Arabica harvest has moved ahead of last year’s pace, and that could limit any short covering moves. The weather remains favorable for harvest in Brazil, and their exports are expected to pick up during the third quarter. There was a positive shift in tone for global markets late on Tuesday that could benefit prices on the idea it could lead to an uptick in restaurant and retail shop consumption.
COTTON
December cotton has broken below a four-month consolidation this week and could be heading lower. News that China is planning to release cotton from its state stockpiles was a pressure point on Tuesday. They have been the largest buyer of US cotton this year. Also, US cotton crop conditions improved last week, which seemed to shut the door on any lingering concerns over the Texas drought. A good/excellent rating of 32% in Texas may not sound impressive to some, but it is close to the 10-year average of 35% and well above the 17% from last year. Texas represents a little more than 50% of US cotton area. The 1-5 day forecast calls for light to moderate rainfall over west Texas and the panhandle. Temperatures over the next 7 days are expected to be above normal and precipitation mixed.
SUGAR
The sugar market received some slightly bullish supply news from Brazil yesterday, but it was not enough to change what remains a bearish supply outlook. The Brazilian trade group Unica reported that Center-South sugar production for the first half of June was 2.550 million tonnes. This was towards the low end of trade forecasts calling for 2.54-2.7 million. Cane crushing totaled 40.299 million tonnes, and sugar’s share was 48.95%, also near the low end of expectations.
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