ADMIS News
COCOA
September cocoa fell overnight to within striking distance of its 18-month low from June 15. The market continues to have trouble overcoming near-term demand concerns. Sharp declines in the Euro and British pound this week have pressured cocoa prices, as this this will make it more costly for processors in the UK and Europe to buy fresh supplies. However, if China is truly changing its COVID policy, it could be poised for an economic recovery, which would support Asian demand.
COFFEE
Coffee’s sharp rally yesterday has put it back on track for a positive quarter and within striking distance of a second higher month in a row, and there appear to be enough bullish supply factors to extend the recovery move. The market held yesterday’s gains overnight and even extended a bit on the upside. Brazil’s major co-op Cooxupe said that their harvest this year was 19% complete, down from 22% at this point last season and below an historic average pace of 29%. While there is still a wide range of forecasts for Brazil’s 2022/23 Arabica production, the slow start to this year’s harvest has kept near-term supply tighter than normal.
COTTON
Cotton seems to have found a floor after closing sharply higher on Wednesday. The market attempted a rally overnight but then backed off into yesterday’s range. Traders have noted an increase in mill fixations this week. They are also reminded that key growing regions may not see very strong crops this year, with the US crop only 37% good/excellent versus an average of 50% and Texas 17% versus an average of 37%. Of the top six states for planted area in the US, only one is running above average. There are ideas that the dry weather in the US may have lowered plantings as well, and this could be brought to light in the USDA acreage report today.
SUGAR
Sugar was higher overnight as it extended a rebound that began after it fell to a four-month low on Monday. The market could see volatile action today with the OPEC-plus meeting having the potential to move the energy markets. A pullback in energy prices weighed on the market yesterday on ideas it could weaken near-term ethanol demand. However, a 1% rally in the Brazilian currency helped sugar hold its ground late in the day as it eases pressure on Center-South mills to produce sugar for export.
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