ADMIS News
COTTON
After a one-day setback, March cotton has resumed its uptrend and has reached its highest level since October 30. It extended its gains overnight but fell back to unchanged on the day as the session progressed, as traders grew cautious ahead of this morning’s weekly USDA export sales report. The news this week about the stimulus measures in China has boosted the demand outlook for US cotton. China has been the number one buyer of US cotton for the 2023/24 marketing year, and the recent surge in export sales has been primarily due to Chinese buying. Traders will be looking to today’s report to see if sales can maintain their recent strong pace.
COCOA
March cocoa pushed though Tuesday’s contract high by $5 overnight but retreated from that level. A failure to decisively push through there today could spark some profit taking. The market has seen daily ranges of $110 or more in six of the last 12 sessions, so despite a bullish supply/demand setup, it remains vulnerable to a sharp downside move. West African supply issues continue to provide support, and there have been positive signs on the demand front that have given fresh strength to the market this past week. Asia showed a significant drop in 4th quarter grindings, and the stimulus measures in China and the boost to their economic outlook are viewed as positive for demand.
COFFEE
While London Robusta coffee extended its rally to a new 16-year high yesterday, the New York Arabica market exhibited topping action when it closed lower after trading to a new high for the move. Forecasts for rain over Brazil’s Arabica-growing regions next week eased dryness concerns and sparked some profit taking. The market extended its losses slightly overnight. It could still draw underlying support from the Robusta market, which reached new contract highs yesterday and held most of those gains overnight. The Robusta market has drawn support from tight supplies in Europe in the wake of Houthi attacks on shipping in the Red Sea. There are also reports that Vietnamese farmers are reluctant to sell their Robusta beans as they hold out for higher prices.
SUGAR
The sugar market has seen a significant rally this month, and it has blown through resistance levels with barely a pause. This has put it in a short term overbought condition as it faces the twice-monthly Unica report on Brazilian sugar production later today. The harvest season normally ends when the rains come in late November or early December, but it was extended this year due to abnormally dry conditions. Recent reports have shown a shift in crushing activity to more ethanol and less sugar. Dry conditions have raised concerns about the upcoming cane crop, but rainfall is in the forecast for the coming week. In Australia, tropical Cyclone Kirrily has strengthened into a Category 3 with wind gusts at 103 mph. It is expected to hit landfall today in Queensland, the primary cane growing area. Reuters reports that India is planning an 8% increase for the floor price that mills must pay for sugar cane in the 2024/25 season, as it attempts to boost production.
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