ADMIS News
COFFEE
Coffee prices had a sluggish finish to April as they only had two positive daily results over the final 8 sessions of the month. With Brazil’s Arabica harvest underway and likely to reach full speed by the end of this month, coffee may remain under pressure. For the week, July coffee finished with a loss of 5.50 cents (down 2.9%) which was a second negative weekly result in a row. There are growing expectations that 2023/24 Brazilian Arabica production will show an increase over the previous season, and that continues to weigh on coffee prices. While their 2022/23 Arabica crop was an “on-year” in their 2-year production cycle, their coffee trees were negatively impacted by back-to-back La Nina weather events that brought drier than normal conditions to the region.
COCOA
Cocoa prices have had trouble sustaining upside momentum since reaching a multi-year high in mid-April as the market saw a “lower high” in each of last week’s sessions. While cocoa continues to have a bullish longer-term supply/demand outlook, this may set the stage for a sizable pullback in early May. For the week, July cocoa finished with a loss of 46 points (down 1.5%) which broke a 2-week winning streak. A positive shift in global risk sentiment further strengthened cocoa’s near-term demand outlook following guidance from Hershey and Mondelez that demand would be resilient in the face of higher prices. With this season’s global grindings widely expected to reach a third record high in a row, the likelihood that cocoa will have a second sizable global production deficit in a row has fueled cocoa’s March/April recovery move.
COTTON
July cotton closed higher on Friday but well off the highs of the day as it attempted to follow through on Thursday’s sharp rally. The market failed to take out Monday’s high, which may have been a disappointment to the bulls. The dollar rallied to its highest level since April 11 early in the session, but it ended up closing well off its highs of the day. A stronger dollar makes US export commodities more expensive. Crude oil closed sharply higher on Friday which could benefit cotton as higher price oil may increase the cost for man-made fibers. The weather forecast for west Texas is wet, which could help alleviate the dry conditions in that region and benefit the upcoming crop.
SUGAR
Concerns over tighter global supplies started an uptrend for the sugar market in early January which accelerated over the past five weeks with prices rising over 6 cents (nearly 30%) in value. While reduced exports and production have fueled concerns, increased sugar production should help ease supply concerns and usher in lower prices. For the week, July sugar finished with a gain of 2.01 cents (up 8.3%) which was a sixth positive weekly result in a row. A month-end rebound in crude oil and gasoline prices provided carryover support to the sugar market. India is unlikely to allow further sugar exports beyond 6.15 million tonnes for the 2022/23 season versus early estimates of 8 to 9 million, while Thailand’s 2022/23 exports may be reduced 500,000 tonnes to 9.0 million. In addition, both the EU and China are heading for lower production this season. In contrast, there are growing expectations Brazil will see a significant sugar production increase for the 2023/24 season.
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