ADMIS News
COFFEE
Coffee prices have gained 11% in value since the end of March, even though there are increasing signs that Brazil will have a production increase during the 2023/24 season. With prices closing above their 200-day moving average for the first time since August, the coffee market may continue to see upside follow-through. ICE exchange coffee stocks fell by only 90 bags on Tuesday, but their continued decline during April provides some evidence of tighter near-term supplies. This has underpinned coffee prices early this month as it reflects some improvement with demand, particularly in Europe where most ICE exchange coffee stocks are stored. The Brazilian currency regained more than 1% in value and reached a 9 1/2 week high which provided carryover support to the coffee market.
COCOA
While there has been improvement in the demand outlook, the cocoa market will have to clear a significant inflation hurdle during today’s trading. However, surprising near-term supply news has lifted cocoa prices close to the late March highs. The latest weekly Ivory Coast port arrivals reading covering the opening of their mid-crop window, but was roughly one-third the size of the comparable period last year. While this period covered the Easter holiday weekend, this has put Ivory Coast’s full-season arrivals total further behind last season’s pace. In addition, this will keep their near-term supply fairly tight at the same time that exporters are looking for mid-crop cocoa to fulfill their remaining main crop sales. Global risk sentiment has maintained a positive tone early this week, and that has benefited the cocoa market as that combined with indications that inflation levels are declining should help to ease near-term demand concerns.
COTTON
There was not much reaction to the mixed USDA Supply/Demand report. The report showed US 2022/23 cotton ending stocks at 4.10 million bales versus an average trade expectation of 4.30 and a range of expectations from 4.05 to 4.50 million. This was down from 4.30 million in the March report and was bullish against trade expectations. US exports increased from 14.10 million bales to 14.30 million. However, world ending stocks came in at 92.01 million bales versus 90.80 million expected (range 89.67-92.00 million) and up from 91.15 million in March. The dollar was lower, which was supportive to export commodities like cotton. Crude oil was higher, which was also supportive.
SUGAR
The market has now posted new contract highs is 8 of the past nine trading sessions. Sugar has avoided any sizable near-term pullbacks since late March as Asian production issues continue to strengthen prices. While key outside markets are providing support, sugar will face key Brazilian supply data during today’s trading. July sugar has now reached an 11-year high. There are reports that India’s top-producing state of Maharashtra only had 6 mills left in operation at the start of this week, and is likely to fall well short of their ethanol supply target this season. A strong recovery rally in crude oil and RBOB gasoline prices provided carryover support to the sugar market, as that should help to strengthen ethanol demand in both Brazil and India.
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