ADMIS News
COCOA
September Cocoa is lower this morning, but it has been chopping back and forth for most of this month. Dealers said yesterday that selling by producing countries was keeping further price gains in check, but they also added that the supply squeeze was intact, which is not likely to change until new crop harvest starts in October. Ivory Coast rainfall has dropped off sharply this month. This follows a seasonal pattern, but the average daily precipitation is the lowest it has been in at least six years. A similar pattern has developed in Ghana. Farmers have been reporting good growing conditions, as rain mixed with sun is ideal, but one wonders if this is going to cause a problem down the road. So far, pods on trees look plentiful, and growers say that the first half of the main crop harvest should be strong. Grinding numbers in North America and Europe have been better than expected, while Asia has been flat.
COFFEE
September Coffee fell to its lowest level since July 5 overnight, following its steep selloff yesterday. The market remains in a downtrend off a contract high from earlier this month. Rainfall has increased in Vietnam this month, which should help next season’s crop which is usually harvested from November-February. Vietnam domestic prices are lower this week, in sympathy with lower prices in London, but supplies are tight and there is little business being done. The dry conditions in Brazil this year have raised concerns about their Arabica crop, which is in harvest, and there have been reports of small bean sizes, but there is currently no threat of cold weather, either. The market may be seeing pressure from a decline in the Brazilian real, which fell to its lowest level since July 3 yesterday, as this puts additional pressure on growers to sell. ICE arabica stocks fell 1,072 bags yesterday to 812,306, which is their lowest in six sessions. Of the total, 412,981 are from Brazil.
COTTON
December Cotton made a new contract low yesterday, as the market gave up on any need for a weather premium. US crop conditions this week were the best for this point in the season in three years, and the weather forecast has been generally favorable. The 6-10 and 8-14-day forecasts show a return of above normal temperatures across most of the cotton growing areas of the US, with only south Texas seeing normal conditions. This is to be accompanied by drier than normal conditions in north/west Texas, but the Delta and southeast are expected to see normal to above normal rainfall. If this pattern proves true, it could pull crop conditions down. The cotton market also saw pressure from a sharply lower stock market yesterday, and this morning’s US GDP number could be factor to determine direction today. The export sales report this morning could provide support if it shows a strong pattern for new crop. Last week’s report showed US cotton sales for the week ending July 11 at 27,240 bales for the 20234/24 (current) marketing year and 165,590 for 2024/25 for a total of 192,830.
SUGAR
October Sugar was higher overnight after falling to its lowest level since March 2023 yesterday. The market has been under the weight of expectations for a large global production surplus for 2024/25, as improved crop prospects for India, Thailand and the EU have offset concerns about Brazil. However, one firm lowered its forecast for the surplus from previously due to concerns about Brazil’s production. This in contrast to a report from Czarnikow recently that showed a bigger surplus than previously expected. Dry conditions in Brazil have gotten the 2024/25 harvest and crushing off to a fast start, but this is expected to pull yields down as the season progresses. Traders are also watching the percentage of cane allocated to sugar production, as a strong domestic ethanol market is expected to encourage push toward more ethanol crushing. As of July 1, the sugar allocation in Center South Brazil for 2024/25 was running at 48.7% versus 47.7% for the same period last year.
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