ADMIS News
COCOA
December Cocoa was near unchanged overnight; the market is in a coiling pattern that is going on six sessions, which leaves it vulnerable to breakout in either direction. The trade is awaiting the main crop harvest in West Africa, which officially begins next month. Ivory Coast cocoa arrivals have started to pick up and have started to climb above year-ago levels. Growers are hoping for an increase Ivory Coast’s official farmgate price next month. World Weather Service expects west-central Africa to see abundant and at times excessive rainfall in the next week or so, but southern Ivory Coast and southwestern Ghana may not get as much rain as elsewhere. The rainfall will be appreciated after the dry conditions of the past month or so.
COFFEE
December Coffee was higher overnight and was back in the vicinity of Monday’s contract highs. Costa Rica’s ICAFE coffee institute expected their nation’s 2024/25 coffee harvest to produce around 1.70 million bushels of coffee, up 5.6% from 1.61 million in 2023/24. Last year’s harvest was down 16% from the previous year, as that was an off year and they experienced poor weather as well. Costa Rica is the fourth largest producer worldwide. Citi said it sees a smaller, 2-3 million bag global surplus in 2024/25 season, as recent data suggests key producers like Brazil are unable to meet previous production targets. They said Brazil’s drought has impacted much of this season’s crop and that near term rainfall is necessary to salvage a slight surplus. World Weather Service say Brazil’s coffee areas should experience a few sporadic showers during the next ten days, as the region sees a boost in humidity ahead of the monsoon season. Seasonal rainfall may begin in the final days of September and early October with scattered showers and thunderstorms. They expect the more generalized rainfall of the season to hold off until later in October. The rain is needed to induce flowering for the next season. Trees are stressed after the exceptional drought this year. Indonesia needs rain, and it may see some showers and thunderstorms next week. China’s Luckin Coffee is expected to announce, at the G20 meeting in November, an agreement to buy some $2.5 billion worth of coffee from Brazilian producers.
COTTON
December Cotton saw a mild setback yesterday but held in the upper end of Monday’s breakout range. The dollar had a slight recovery yesterday, which may have made the bulls a bit cautious, as a weak dollar makes US cotton exports more competitive. The trade is awaiting the FOMC decision today, with expectation ranging between a 25 and 50 basis-point cut in rates. A 50 bp cut could weaken the dollar and support cotton, but we suspect that it may have already been built into the market and that a 25 bp cut would be a disappointment. US export sales are off to a slow start this year, and they could use all the help they can get. US crop conditions fell last week, especially in Mississippi and Arkansas, which saw heavy rains with 79% of Mississippi’s crop having bolls open and Arkansas at 92%. West Texas may get some rain late this week and into the coming weekend, which could support late season cotton development.
SUGAR
March Sugar saw a breakout rally yesterday to its highest level since July and extended its move further overnight. Brazilian 2024/25 production is expected to fall below year ago levels as the season progresses as the extended drought takes its toll. Reports yesterday that fires were still burning in cane fields added to the concern. Key production areas in Sao Paulo, Parana, southern Minas Gerais and Mato Grosso do Sul could see some relief next week as showers develop with the arrival of the rainy season. More extensive rains may not arrive until mid-October. This would probably not help near term production, but it could improve the long term prospects. China imported 770,000 metric tons of sugar in August, up 109% from a year ago. Cumulative imports for 2024 have reached 2.49 million tons, up 57.9% from the same period last year.
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