ADMIS News
COCOA
July Cocoa gapped lower this morning and fell back to the bottom of yesterday’s range. It had traded up through the 0.618 retracement (at 9289) of the selloff from the April high to the May low yesterday but closed just below that line. It has held below there so far today, which seems to leave yesterday’s high at 10,047 as an important resistance area.
The market rallied yesterday on the ICCO’s revised forecast calling for an even larger global supply deficit than previously forecast. Their quarterly update, released late Friday, predicted a global production deficit of 439,000 tonnes for the 2023/24 season (October-December), up from a previous forecast of 374,000. Production was raised by 11,000 tonnes, but grindings were increased by 76,000. The 2022/23 deficit was increased to 76,000 tonnes from 74,000 previously. The strong grindings were a bit of a surprise because many had expected the record high prices to pull demand lower. ICCO describe the grindings as “unrelenting.”
Ivory Coast cocoa arrivals for the week ending June 2 came in at 39,000 tonnes, up from 36,000 the for the same week last year. Total arrivals since the marketing year began in October have reached 1.508 million tonnes, down 28% from the same period last year. Reuters reported that rain was below average in most of Ivory Coast’s growing areas last week, and that more downpours are needed to help the April-September mid-crop finish strong. The crops need abundant rain but also more sunny spells to help fight disease and insects. Recall that last summer excessive moisture and a lack of sunny weather caused problems with black pod and swollen shoot disease that started a downward spiral in production.
SUGAR
July Sugar looks like it is attempting to break out of its three-week consolidation pattern after receiving some bullish news on the Brazilian production front last week. The Unica report on Friday showed Brazil’s Center-South sugar production for the first half of May at 2.567 million tonnes, up 0.97% from the same period last year. This was lower than a pre-report survey calling for a 6.3% increase. Production was up from 1.854 million tonnes in the second half of April, and this shows cane harvest and crushing activity are moving forward. However, the percent increase over last year has slowed down as the season has progressed. Sugar production for the second half of April was 84% ahead of a year ago. Dry conditions in Center South Brazil helped the harvest get off to a fast start, but they could also lower yields as the season moves forward.
Wilmar Sugar, Australia’s largest sugar producer and the world’s fourth-largest exporter, said it will bar workers who take part in strike action from its mill. This marks an escalation of a wage dispute that has already delayed the start of sugar production by two to nine days.
COFFEE
July Coffee was slightly lower overnight but inside yesterday’s range after USDA’s latest update on Brazilian coffee production called for a 5.4% increase in 2024/25. ICAFE reported Coast Rican exports at 135,027 bags in May, down 3.6% from a year ago. Exports are down 5.9% for the marketing year so far.
USDA said that farmers reported smaller yields earlier in the season but that they should improve as harvest advances. This will mark the third straight year Brazil’s output has increased, something that has happened only seven time in the last 144 years.
Dealers said weather is improving, monsoon well under way and prior dryness not significant enough.
COTTON
July Cotton extended yesterday’s selloff overnight, trading to its lowest level since October. The weekly Crop Progress report released yesterday afternoon showed 61% of the US cotton crop was rated good/excellent as of Sunday, up from 60% a week ago and 51% last year.
Good soil moisture in west Texas is in sharp contrast to the extremely dry conditions of the past two years. The market had rallied off its previous low from mid-May on ideas there was not enough weather premium for this early in the season, but there has been mostly good news on the rain/planting progress/crop conditions front since.
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