ADMIS News
SUGAR
March Sugar had a sharp reversal yesterday off this week’s lows in is near unchanged this morning. The arrival of seasonal rains in Brazil has improved the prospects for the 2025 cane crop, but supplies could be tight early next year. The question how well the crop recovers from the extreme drought, heat and wildfires this year. The rains could slow the harvest for the rest of 2024. The recent UNICA report showed center south production falling off sharply in the second half of October, but that was expected. Total production since the market year began in April is running about even with a year ago. It looks like India will stay out of the export market and may even import sugar this year. Thailand’s production is expected to recover.
COCOA
March Cocoa extended this week’s rally overnight to trade to its highest level since April 25, the day after the market peaked. The rally this week has been supported by reports that the Ivory Coast Coffee and Cocoa Council had reduced its sales of cocoa export contracts for the 2024/25 season by 40%. This stems from some unseasonably heavy rainfall in October that may have damaged pods and caused some mold problems with delivered beans. This could lower main crop production later in the season, perhaps later this month or in December. Other, anecdotal reports from farmers have been mostly positive towards production, but this new wrinkle adds concern that 2024/25 production may not be enough to alleviate tight supplies brought on by three years of production deficits and a disastrous crop last year that sent nearby prices to $12,261 per ton. West Africa is expected to see regular showers and thunderstorms along the Atlantic Coast while most areas to the north are expected to be dry. This should be good for crop maturation and harvesting. Isolated, coastal regions of Ivory Coast, Ghana and Cameroon have received moderate amounts over the past 24 hours. The funds have not been very active in this market since January.
COFFEE
Recent assessments of growth patterns on trees have suggested that Brazil will have difficulty producing a strong arabica crop in 2025. Reuters reported yesterday that a physical broker in Brazil having recently returned to arabica farms that he has been monitoring since March, and said that the trees are showing a lack of potential despite the recent rains, with too many new leaves instead of fruits. Another firm forecast Brazil’s 2025/26 coffee crop at 65.6 million bags, down slightly from 65.9 million in 2024/25, but the arabica crop was only 40 million bags, down from 44.7 million in 2024/25, while robusta was forecast at 25.6 million, up from 21.2 million. Local Brazilian dealers said physical arabica prices were climbing thanks to limited stocks and concerns about next year’s crop. Tropical Storm Sara is moving towards the western coast of Honduras and is threatening catastrophic flooding there before moving on the Guatemala and Nicaragua. Around 10 to 20 inches of rain is expected across northern Honduras, with locally heavier amounts likely across the northern coastline. Between 4 and 10 inches can be expected in the rest of Honduras and far northern Nicaragua. Extensive flooding and mudslides are expected across the impacted area, which will cause property damage. Traders are also concerned about delays in Vietnam’s harvest due to a succession of typhoons that have brought abundant rains to the Central Highlands.
COTTON
After a brief recovery rally yesterday, March Cotton sold off overnight to trade to its lowest level since September 11. The strong dollar, the threat of tariffs, and the slow pace of exports this year have increased the selling pressure this week. Open Interest is down 9% since November 1, indicating the market is in a long-liquidation mode. This weekly export sales report today could provide some respite if it comes in strong. Sales have improved somewhat over the past few weeks, but cumulative sales are at their lowest for this point in the season since 2015. Australia is starting to get the rain it needs for planting and early crop development. More improvement of soil moisture will occur in New South Wales and Queensland is expected in the next two weeks.
Interested in more futures markets? Explore our Market Dashboards here.
Risk Warning: Investments in Equities, Contracts for Difference (CFDs) in any instrument, Futures, Options, Derivatives and Foreign Exchange can fluctuate in value. Investors should therefore be aware that they may not realise the initial amount invested and may incur additional liabilities. These investments may be subject to above average financial risk of loss. Investors should consider their financial circumstances, investment experience and if it is appropriate to invest. If necessary, seek independent financial advice.
ADM Investor Services International Limited, registered in England No. 2547805, is authorised and regulated by the Financial Conduct Authority [FRN 148474] and is a member of the London Stock Exchange. Registered office: 3rd Floor, The Minster Building, 21 Mincing Lane, London EC3R 7AG.
A subsidiary of Archer Daniels Midland Company.
© 2021 ADM Investor Services International Limited.
Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. The information and comments contained herein is provided by ADMIS and in no way should be construed to be information provided by ADM. The author of this report did not have a financial interest in any of the contracts discussed in this report at the time the report was prepared. The information provided is designed to assist in your analysis and evaluation of the futures and options markets. However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to ADMIS. Copyright ADM Investor Services, Inc.
