ADMIS News
COCOA
The cocoa market is looking toppy for the first time in a long while. The market sold off modestly yesterday after failing to extend last week’s rally, and it was lower again overnight. Last week’s grindings data for the first quarter showed smaller than expected declines in Europe and Asia and a surprise increase for North America, but the market seems ready to discount that news. Rainfall over West African growing areas this week is expected to benefit the region’s upcoming production and is the first positive news for crop prospects in quite a while. The region’s mid-crop harvest is expected to ramp up by the middle of May and reach full speed by mid-June. Reports this week of plantations being established in Liberia on deforested land complicates efforts to discourage similar activity in Ivory Coast, Ghana, and other producing nations.
COFFEE
July coffee continues to back off from last week’s high, and perhaps the market got ahead of itself with its rally this month. The fund net long posted a new record last week, leaving the market short of buying fuel and vulnerable to a correction. Tensions in the Mideast have eased a bit this week, which also eases concerns about Red Sea shipping blockages. Uganda coffee exports plunged 32% year on year in March, hurt by a poor harvest in one of the major growing areas, according to the Ugandan Coffee Development Authority. A large portion of European robusta coffee originates in Vietnam and Indonesia, both of which are having production issues due to drier than normal conditions over the past few months. This is supposed to be Vietnam’s rainy season, and a heatwave is damaging the crop.
COTTON
May cotton has seen a modest rally off last week’s lows, and the oversold condition of the market after the steep selloff from the March contract high would seem to justify the move higher. The weekly Crop Progress report showed the crop planting pace is very close to last year and to the average. That and the improved soil moisture relative to a year ago suggest a good start to the crop. The progress report showed 11% of the US cotton crop was planted as of Sunday, up from 8% last week and on par with 11% a year ago and a 10-year average of 10%. Texas was 16% planted versus 13% last week, 17% a year ago and a 10-year average of 14%. A modest recovery in the stock market and a slightly weaker dollar were supportive to cotton, but the US dollar is still hovering around its highest level since last October, which does not bode well for US exports.
SUGAR
July sugar has found modest support over the past several sessions, as dry weather forecast for Brazil over the next 10 days has raised more concerns about their upcoming crop. The Brazilian real has made an impressive bounce after plunging lower last week, which reduces pressure on Brazilian growers to sell their supplies. A pullback in energy prices this week also puts pressure on sugar, as it reduces the attraction of diverting cane crushing to ethanol. India’s sugar consumption is expected to hit a record high this year due to the extreme heat that nation is experiencing this summer. Thailand’s Sugar and Cane Board said this week that their nation’s 2023/24 production will come in at 8.71 million tonnes, down 21.7% from 2022/23.
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