ADMIS News
COFFEE
December coffee is close to testing its January low after extending yesterday’s losses overnight. Brazil’s coffee exports are expected to remain strong during the fourth quarter, and this has weighed on prices this week. Also, the Brazilian real has declined sharply for the past two weeks to its lowest level since May, and this puts pressure on Brazilian growers to aggressively market their crops. Wet weather in the forecast for Brazil’s major Arabica growing regions could help with the flowering period for the upcoming 2024/25 crop, which is a change of pace from earlier this month when the market rallied sharply off concerns that unseasonably hot and dry weather was threatening the crop.
COCOA
The two-week selloff in the cocoa market has allowed it to correct an overbought technical condition, and an improvement in risk attitudes today may spark a bounce. The Euro and British Pound are ending the week on a positive note, which makes cocoa less expensive for European grinders to buy. Demand has been a concern recently because of the sometimes-shaky global economic outlook and the fact that cocoa prices have reached record highs. Recent rainfall in West African growing areas should benefit early main crop production, but the region normally has drier than normal conditions during an El Nino event, and this one has been projected to be one of the strongest this century. Ivory Coast and Ghana official farmgate prices are set to increase at the start of the new marketing year, which could draw more cocoa to market.
SUGAR
March sugar eased a bit overnight after yesterday’s sharp rally that lifted it off Wednesday’s three-week low. There is rain in the forecast for Brazil’s Center-South cane-growing regions this weekend and late next week, which may cause delays to harvest and crushing activity. US top sugar state Louisiana is expecting to see a sharp decline this year because drier than normal weather has hurt sugarcane development. Soil moisture is the lowest in seven years. Crude oil prices were higher overnight, which also lends support to sugar on ideas it could encourage millers to boost their ethanol production. New Zealand’s National Institute for Water and Atmospheric Research says most of the criteria for classifying an El Nino event were satisfied during September. This comes on top of similar declarations by the US agencies earlier this year.
COTTON
The cotton market has been moving higher this week on expectations that the USDA will lower the US production forecast in upcoming reports, and it has done this despite a questionable demand outlook. The market may receive some support today from higher equity prices and a weaker dollar. Yesterday the dollar closed lower for the first time in seven sessions, and it extended those losses overnight. This is after it reached its highest level since last November on Wednesday. The weekly US Drought Monitor showed approximately 41% of cotton production was within an area experiencing drought as of Tuesday, unchanged from the previous week. New Zealand’s confirmation that an El Nino event has formed could increase the market’s focus on Australian cotton production for the upcoming year
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