ADMIS News
COCOA
July Cocoa reached its highest level since February 12 early Monday, successfully taking out the April 15 high and leaving a pattern of higher highs and higher lows intact. The upcoming mid-crop in West Africa is expected to be strong, and the weather there looks favorable. However, traders are becoming concerned about the high cost of fertilizer. El Nino is expected to arrive by June. That could eventually bring drier than normal conditions to key growing areas in Indonesia and West Africa but not soon enough to hurt the mid-crop. It could cause problems with the main crop, depending on how soon the dry conditions develop. Routinely occurring rain and thunderstorm activity is expected in West Africa daily through the next week to ten days. All crop areas will be impacted and some of the rain is predicted to be moderate to heavy. The moisture will be sufficient in maintaining a very good outlook for cocoa produced from Ivory Coast to Cameroon and Nigeria.
COTTON
May Cotton was slightly lower early Monday after reaching a new contract high shortly after the open. Higher Crude Oil prices lent support early, but some drought relief has emerged in US growing areas that may have undercut the recent rally. Rain in the southeastern corner of the US brought relief over the weekend but World Weather Inc. warns that the drought is not over. The dryland areas of West Texas saw some welcome rain over the Thursday night and Friday but much more rain is needed throughout the region and only scattered showers are expected for a while. The Delta might be the most improved by the recent rainfall.
SUGAR
July Sugar was higher early Monday, extending its recovery rally and reaching its highest level since April 7. The Australian sugar analysis firm Green Pool on Friday raised its projected global sugar deficit for 2026/27 to 4.33 million metric tons from a previous estimate of 1.66 million. This follows a general pattern of tightening supply expectations across the industry off ideas Brazil will raise its ethanol production from cane this year due to high energy prices, which will cut into sugar production. That notion was confirmed last week when Brazil’s president said the nation will increase the ethanol mix in gasoline to 32% from the previous 30%. The strong Brazilian real also encourages domestic consumption (in the form of ethanol) and reduces the incentive to export (in the form of sugar). Other sugar analysts have either reduced their global surplus forecast or increased their projected deficits recently. The upcoming El Nino event has the potential to disrupt production, but the effects may not be felt until 2027.
COFFEE
July Coffee was slightly higher early Monday after bouncing off a two-week low on Friday. The upcoming Brazilian crop is expected to be large and harvest is expected to begin in a couple of weeks, but the market has found buyers on breaks since mid-March. Vietnam government data showed the nation exported 220,000 metric tons of coffee in April and that January-April exports have reached 810,000 tons, which is up 15.8% from the same period a last year. Indonesia exported 7,304.9 tons in March, down 68% from a year earlier. Brazil could experience net drying conditions this week with some brief cooling late in the week, but there is no risk of crop damaging cold.
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