ADMIS News
COFFEE
December coffee regained upside momentum yesterday and reached its highest level in three weeks. The supply outlook continues to be dominated by large Brazilian production, but there have been signs of improving demand. The Brazilian real has been trending higher and has reached its strongest level against the dollar in 2 1/2 weeks. This eases pressure on Brazilian farmers to market their output for export. Brazil’s strong 2023/24 Arabica crop could be offset by lower production from Central America and Colombia. Colombia is expected to see an uptick in their production by the end of the year, but it is expected to well below the levels they saw from 2015 to 2021.
SUGAR
Heavy rains are causing a backup of sugar shipments out of Brazil, and this is causing additional tightness in a market that is already facing tight supplies. Bloomberg is reporting that ships are waiting for more than 3 weeks to be loaded versus the usual 10 days. The rains force ship captains to close holds, which delays loading. The delay in exports is particularly acute, given lower production expected out of India and Thailand this year. The Indian Government has officially extended its export restrictions beyond October 31, a move that had been widely anticipated. The stronger Brazilian real eases pressure on mills there to produce sugar for export, and a spike in crude oil prices overnight in the wake of an explosion or possible missile strike at a hospital in Gaza are also supportive to sugar.
COCOA
The stronger than expected European third-quarter grind data last week inspired a rally in December cocoa, but the market must face the North American and Asian data tomorrow. Of the two, North America is more likely to post a sluggish result following their year-over-year declines. The European data assuaged concerns that record cocoa prices had hurt demand. December NY cocoa has resumed its uptrend, and December London Cocoa reached a new all-time high. West African supply issues remain a significant source of support for the market after the latest weekly Ivory Coast port arrivals came in below year-ago levels.
COTTON
US cotton supplies are tight, but the prospect of ample global supplies has the market in a downtrend. December cotton is approaching a major retracement level that could provide support in the next session or so. The US export sales pace is the slowest in seven years, but that is not surprising given the smaller crop. China is accepting Australian cotton for the first time since Covid. Global cotton demand concerns linger due to the uncertain economic situation in China. Recent US weather has been conducive for harvest activity, but rain is expected to hit west Texas this coming week, and the 6-10- and 8-14- day forecasts show above normal chances of rain in Texas and the Delta, which could slow things down. The trade will be watching Australia’s weather to see how El Nino affects their upcoming crops.
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