ADMIS News
COCOA
December Cocoa is higher this morning, and it has extended its rally off last week’s low. The market has expanded is range over the past two weeks but has not established a trend, as it awaits the arrival of the west African main crop. Recent heavy rainfall in Ivory Coast has damaged roads, which is interrupting the movement of beans to port. The rains have also slowed harvest and raised concerns about bean quality. In contrast, Ghana’s cocoa regulator COCOBOD said yesterday that cocoa arrivals since the start of this year’s harvest on September 11 had reached 13,000 metric tons by September 19, up from 1,600 tons for the same period last year. World Weather Service says daily showers and thunderstorms will occur through the next week in west-central Africa. The daily rainfall will vary widely and will range from light to locally heavy with all areas seeing receive multiple rounds of rain and sufficient amounts to maintain moisture abundance in most cocoa areas.
COFFEE
The outlook for Brazil’s coffee crop is improving with the gradual advancement of seasonal rains, but the market has managed to close higher for three straight sessions, as it appears to have gotten a bit oversold on the rain theme. The market had had several bearish factors thrown at it, including the possible delay in the implementation of the EU’s anti-deforestation rule and the aforementioned rain. Showers and thunderstorms arrived across Brazil’s coffee production this week, and they are expected to continue through today, which should stimulate flowering, but more rains will be needed to develop the crop and help trees recover from the extended drought. World Weather Service expects rains to increase gradually through the month. US CPC has given La Niña a 60% chance of arriving between September and November, down from 71% in its previous forecast. It is expected to last through January to March 2025. In other words, It is expected to be weak and short-lived. La Niña can bring dry conditions to the southern half of Brazil, and the reduced threat could be viewed as bearish.
COTTON
December Cotton was slightly higher overnight, continuing its choppy pattern ahead of today’s USDA supply/demand report. For the report, traders are looking for a decline in US 2024/25 production in the wake of recent deterioration in US crop conditions and a slightly similar reduction in US exports due to the slow pace of sales so far this year. The average trade expectation for production is 14.27 million bales (range 14.00-15.00), down from 14.51 million in the September report. Exports are expected at 11.65 million bales (range 11.3-12.2) versus 11.80 million in September. This would put US ending stocks at 3.98 million bales (range 3.50-4.50), slightly lower than 4.00 million in September and towards the middle of the range of the last five years (3.65-4.65 million). World ending stocks are expected to come in around 76.34 million bales (range 75.00-77.80 million) versus 76.49 million in September. This would still be the highest since 2019/20 (83.49 million).
SUGAR
March Sugar was higher overnight, and the market appears to be consolidating ahead of the bi-monthly Unica update on Brazil center-south production, which will probably be released early next week. A survey of analysts conducted by S&P Global showed expectations for center-south production in the second half of September at 2.86 million metric tons, which would be down 15.3% from the same period last year. In the first half of the September, production was 3.124 million tons, which was down 0.08% from last year. Cumulative production for 2024/25 was up 3.6% from the previous season. The arrival of seasonal rains in Brazil may help recharge the cane crop for the future, but it will also slow the harvest. US CPC has given La Niña a 60% chance of arriving between September and November, down from 71% in its previous forecast, reducing the threat of drier than normal conditions in center-south Brazil next year.
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