ADMIS News
COCOA
December Cocoa traded to its highest level since July 31 overnight, extending its rally off Monday’s four-week low. The market remains in a relatively narrow range, being supported by tight near term supply but with an expectation of a recovery in west African production this fall. Rainfall in west Africa has shifted to the north as it often does in July and early August. Cocoa production areas should see less frequent and less significant rain in the south for a while, but rain is expected to resume later this month and in September. Ivory Coast growers have been optimistic about the upcoming crop. A Reuters poll of analysts projected a record global deficit of 475,000 metric tons for the 20234/24 marketing year, which runs through September. This is up from a previous poll in February that projected a 375,000-ton deficit. The poll also projects a 108,500-ton surplus for 2024/25.
COFFEE
September Coffee extended its rally for a second session overnight and traded to its highest level since July 22. The market still seems to be drawing support from a comment on Monday by the president of Brazilian coffee co-op Cooxupe that they now expect a decline in production in 2024. Ongoing dry weather in Brazil is also raising concerns about 2025 production. No significant rainfall is expected in the main coffee producing region of Minas Gerais for at least 10 days. Brazil exported 202,266 metric tons of green coffee in July, up from 140,454 for the same period last year. Colombia produced 1.16 million bags of washed arabica coffee in July, up 22% from 947,000 a year ago, according to the National Coffee Federation. Exports totaled 1.01 million bags, up 18% from a year ago. World Weather Service says Vietnam rainfall should be periodic and timely enough to support coffee crop, and Colombia and Venezuela rainfall will continue routinely during the next ten days, maintaining moisture abundance.
COTTON
December Cotton fell to a new contract low overnight but only barely, and it has since moved to higher on the day. Demand concerns and a lack of imminent threat to what is looking like a strong US crop are making it difficult for this market to put in a low. However, dry trends are developing in Texas and the Delta. World Weather Service days west Texas may get a few showers Friday and Saturday but that drier weather will dominate next week. That area could use some rain. Texas’ crop conditions fell to 32% good/excellent this week from 40% last week and 46% two weeks ago. This was the lowest they had been all year. Also, the US Delta forecast calls for dry conditions for the next ten days, which could deplete soil moisture and cause some crop moisture stress. Heavy flooding in the Carolinas could have a negative impact there as well. Equity and crude oil were higher overnight, but they still had not recovered all of Monday’s losses, and this is not enough to calm concerns about a potential US recession.
SUGAR
October Sugar was higher overnight and managed a modest recovery off Monday’s lows. The market appears to be drawing support from equities and crude oil, which are also moderately this morning. The negative turn in global economic sentiment was a drag on sugar prices this week, but another pressure point has been improving rainfall in Thailand and India. World Weather Service reported that Thailand’s soil moisture has improved, but more rain is needed in the west. The next boost in precipitation may not occur until August 14-20. Brazil is expected to see seasonably dry conditions over the next week to ten days. Brazil exported 3.78 million metric tons of sugar in July, up from 2.94 million last year. However, Center South production fell below year ago levels in the first half of July, and dry conditions this year, which allowed for a fast start, may start to pull down yields. Russia’s fourth sugar beet test of the season showed an average root weight of 326 grams, down from 370 at this time last year, according to the Russian Sugar Producers’ Union industry lobby. Sugar content was 15.5% versus 13.25 a year ago.
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