ADMIS News
COCOA
Tuesday’s negative shift in global risk sentiment has put the cocoa market back on the defensive, but a rebound in the euro and British pound and Ivory Coast growers’ disappointment over the official farmgate price may provide support today. Equity markets in the US and Europe have had a rough start to the month, and the uncertain economic outlook raises concerns about demand, especially for discretionary items such as chocolate. Weakness in the euro and the pound has put pressure on cocoa recently on the idea it will make it more expensive for European grinders to buy cocoa, but both currencies were higher overnight Lower Ivory Coast port arrivals over the past few weeks indicated that farmers were holding back on marketing their newly harvested beans until the start of October when the higher farmgate price was put in place, which suggest arrivals will start to pick up speed.
COTTON
The poor US crop will help tighten US supply, but Brazil stands ready to make up for the shortfall on the global market, and this seems to be keeping December cotton in a sideway pattern. The reversal lower in the dollar overnight offers some hope on the US export front, but this comes after the currency reached its highest level since November yesterday. Brazil is on track for record cotton shipments in 2023/24, and there are reports of record exports for September. Rain fell on much of West Texas and portions of the western and southern Panhandle on Monday, causing harvest delays and some cotton discoloration, while rain also fell on the southern Coastal Bend and portions of south Texas. More rain in western Texas is expected through Friday.
SUGAR
India’s monsoon appears to be starting to withdraw, roughly three days behind normal, and this may provide some support to the sugar market today. The late departure has extended rainfall chances for India’s states of Maharashtra and Karnataka, both of which saw below normal rainfall for the 2023 monsoon season. Sugar was lower overnight as negative global risk sentiment and sluggish key outside markets put additional pressure on the market, but prices have bounced off their lows. Crude and gasoline prices are both lower again today, which can pressure sugar on ideas it will weaken ethanol demand in Brazil and India. The Brazilian real fell to a six-week low yesterday, which also weighed on prices on ideas it will encourage Center-South mills to produce sugar for export. There are reports that Philippines may increase their sugar imports because El Nino has affected their cane crop.
COFFEE
Coffee prices continue to hold their ground above last Friday’s low, but they face headwinds from negative global risk sentiment. A new six-month low in the Brazilian real puts additional pressure on coffee, as that provides further incentive for Brazilian farmers to market their output for export. The negative shift in Central American production has come as Colombia’s output remains close to 9 1/2-year lows. Rains have arrived in most producing areas of Brazil, with temperatures falling from the near-record highs of last week, and this has renewed hopes for good flowering and production this year.
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