ADMIS News
COFFEE
After several weeks of choppy action, coffee prices have been unable to break out of their March consolidation zone to the upside. With near-term demand prospects likely to be hurt by a negative shift in global risk sentiment, coffee prices may remain on the defensive. Indications that some regions in Brazil’s Sao Paolo state may begin their Arabica harvest in late April put early pressure on coffee prices, even though the harvest in the state of Parana may be delayed due slow maturation of coffee beans. After the close, the FOMC meeting results fueled a negative shift in global risk sentiment that could impact restaurant and retail shop coffee consumption over the next few weeks.
COCOA
Bullish supply developments have been a key factor with cocoa’s nearly 10% increase in value over the past 5 sessions. The near-term demand outlook may take a negative shift following events after cocoa’s close, however, and that leaves the market vulnerable to a pullback. May cocoa maintained upside momentum and reached a new multi-year high. Indications that a lack of adequate fertilizer and pesticide use will negatively impact this year’s West African mid-crop production continues to underpin cocoa prices this week. A mild rebound in risk appetites before the FOMC meeting results provided cocoa prices with additional support. Both the Eurocurrency and British Pound reached new 6-week highs late yesterday which may provide carryover support to the cocoa market. Global risk sentiment took a negative shift late yesterday which could dampen near-term demand for discretionary items such as chocolates.
COTTON
May cotton closed higher on the session yesterday but well off the highs of the day. The dollar was down sharply, with the Dollar Index falling to its lowest level since February 3, and this was viewed as supportive to cotton. The stock market was higher most of the session, but it reversed in the wake of the FOMC meeting and fell sharply after the Fed announced another 25 basis-point hike. Some traders had thought that the banking crisis would postpone any additional rate hikes, but those notions were put to rest. The Fed announcement came after the cotton market had closed, so the news could pressure cotton at the start of the upcoming session.
SUGAR
Sugar prices have broken out of their mid-March consolidation to the upside as they have benefited from strength in key outside markets. The negative shift in global risk sentiment could put the brakes on sugar’s rally, however, and that could leave the market vulnerable to a near-term pullback. May sugar extended this week’s recovery move to a new 6-year high. A strong rally in crude oil and RBOB gasoline after the weekly EIA supply report provided the sugar market with carryover support, as that should help to shore up near-term ethanol demand. After sugar’s close, the FOMC meeting results triggered a negative shift in global risk sentiment, and that in turn put significant early pressure on the energy markets.
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