ADMIS News
SUGAR
October Sugar was lower for the second straight session early Monday, following a move to its highest level in more than two years last week. The market has drawn support in recent weeks from concerns over the beet crop in Europe due to heat and drought and concerns about crops in Brazil, India, and Thailand as well. The situation in India sparked the latest leg, with the government announcing last week that it will allow duty free imports of up to 1 million metric tons over the next couple of months due to record domestic prices. India has experienced drier than normal conditions, but some view the damage as overestimated and blame the high prices on hoarding.
COFFEE
December Coffee was higher early Monday but inside the range of the past two months. The market has had a bullish bias since the latter half of July, as near term supplies have remained tight and Brazilian producers have appeared reluctant to sell their product. Bouts of heavy rainfall in Brazil in June and July delayed the harvest and damaged bean quality, could reduce the amount that will pass grading at ICE. El Nino could threaten the upcoming crop in Brazil if it brings dry conditions during the flowering and cherry-setting stages later this year. World Weather Inc. said Brazil may get enough rain later this week into next to induce a few bouts of flowering, which will need to be closely monitored. Vietnam has seen some flooding in the northern arabica areas, but they are primarily a robusta producers and so far they have not seen the type of dryness that Indonesia has.
COCOA
December Cocoa was lower early Monday but till inside the consolidation of the past six weeks. World Weather Inc. said rain fell in parts of West Africa over the weekend, including much of Ghana away from the coast, northern Ivory Coast and southern Nigeria and southwestern Cameroon. Scattered showers and thunderstorms are expected to persist week and into the weekend, with northern crop areas the wettest and the coasts missing out for the most part. (Most of Ivory Coast missed out as well.) World Weather Inc. points out that a more generalized rain will still be needed, especially in southern production areas. However, the wetter weather seems to suggest that the recent dry trend is coming to an end and that the seasonal return of wetter weather could be on track despite El Nino, though it may be too early to tell.
COTTON
December Cotton fell to its lowest level in four sessions early Monday but was still hovering near last week’s contract highs. Dry conditions in Texas and parts of the Delta have manifested in declining crop conditions over the past several weeks. World Weather Inc. says dryland crops in West Texas have been deteriorating recently and the trend will continue for the next ten days. The Delta has been too hot and dry recently, too, but some partial relief is possible over the next ten days. Last Monday’s crop progress report showed 38% of the US cotton crop was rated good/excellent as of August 16, down from 40% the previous week and a five-year average of 47%. Texas was 21% G/E, down from 24% the previous week and a five-year average of 34%. Based on the weather this past week, we would expect steady or worse conditions in this afternoon’s update. The dollar was higher early Monday after falling to its lowest level since late May last week. This came in the wake of a mover in US yields to their highest level in three years, which I guess puts the cotton market in the position of watching the bond market. The weaker dollar make US products more attractively priced on the global export market. However, we suspect the dominant force remains the condition of the US crop.
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