ADMIS News
COCOA FUTURES
The cocoa market could see some additional pressure today as traders may be tempted to take profits going into the weekend. Yesterday, news that the German CPI number showed an increase in the year-over-year rate disappointed cocoa bulls on ideas that inflation could weaken demand for chocolate, which may have been what sparked a wave of profit-taking. The supply outlook remains bullish, with heavy rainfall in the forecast for West African growing areas that could further disrupt the region’s midcrop harvest. Abidjan, Ivory Coast has a greater than 50% chance of rain for four out of the next seven days.
COFFEE FUTURES
The coffee market showed signs of life late on Thursday when it bounced off its lows and finished with only a modest loss after trading to its lowest level in five months. The market has gotten oversold and could be vulnerable to short covering if shorts look to take profits today. Dry weather in Brazil has supported an active harvest pace after delays earlier this season, and this has encouraged a steep selloff in September coffee over the past 2-3 weeks. Somar Meteorologia, a private Brazilian meteorological firm, reported that Brazil’s Minas Gerias region, which produces 30% of that nation’s Arabica crop, received no rain last week. Earlier this week Brazil’s largest coffee cooperative, Cooxupe reported that their coffee harvest was 28% complete as of June 23 versus 19% a year ago.
COTTON FUTURES
We expect the cotton market to take its cues from the USDA Acreage report this morning. Traders are expecting a modest decline in planted area, and if it comes in sharply higher or lower, it could determine direction for the next week. The average trade expectation calls for US cotton planted area to come in 11.119 million acres, with a range of expectations from 10.5 to 12.0 million. The forecast in March was 11.256 million, and last year’s plantings totaled 13.763 million. The China National Cotton Information Center (a state-owned information agency) is forecasting their nation’s cotton output to fall 13.5% this year because of a decline in acreage and yields. The major cotton-producing region of Xinjiang saw farmers switch some of their planted area from cotton to grains, which have a shorter growing season, because extreme weather caused delays this spring.
SUGAR FUTURES
Sugar has been in a tailspin after breaking below key support levels earlier this week. The only bullish things we can say today is the market has gotten short-term oversold and that shorts may be tempted to take profits going into the weekend. Dry weather in Brazil’s Center-South region during the second half of June has allowed their harvest and crushing operations to catch up after earlier delays. The consultancy firm Datagro has raised its 2023/24 forecast for Brazil cane crushing to 606.5 million tonnes from 598.5 million previously. Sugar production is expected to reach a record 39.1 million tonnes, topping the previous record of 38.47 million in 2020/21.
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