ADMIS News
COTTON
The market was pressured yesterday by some disappointing economic news out of China, after a Reuters report showed Chinese imports fell 7.9% year over year in April versus expectations for 0% change. A major cotton trader and processor in China has warned that Chinese cotton production could decline this year after frigid weather delay sowing and hurt plants in some areas, according to a story in Bloomberg. The outlook for the upcoming US crop has improved significantly this week. The crop progress report showed the planting pace is close to the 10-year average, and rain amounts have increased in west Texas. For the first look by the USDA for the 23/24 season, traders see US production at 15.78 million bales, 14.70-18.05 range, as compared with 14.68 million bales last year.
COCOA
While the market’s focus has been on the demand outlook, cocoa has been seeing bullish supply developments this season. With more signs of a second sizable global production deficit in a row, cocoa should maintain upside momentum. There are reports that swollen shoot disease is spreading in Ivory Coast growing areas. With Ghana and Nigeria already reporting disease outbreaks earlier this season, this means that three of the 4 major West African cocoa growing nations have had issues with their 2022/23 production. Inflation levels remain high enough to negatively impact global chocolate demand, so the cocoa market may take some direction from the April US CPI and core CPI reading released at midsession.
COFFEE
Coffee’s choppy price action so far this month has kept the market holding above last week’s low. If global risk sentiment can improve following today’s key US economic data, coffee should be able to break out above its May consolidation zone. Colombia’s production pace remains near multi-year lows which continues to underpin coffee prices. Brazil is having a relatively slow start to this year’s harvest as some areas of Minas Gerais and Parana states have not started their harvesting operations. While most of Vietnam’s coffee production is of the Robusta variety, their 2023 exports are running 5.5% behind last season’s pace which is leading to tighter near-term supply in many areas of the world.
SUGAR
Sugar prices have found support from key outside markets, but have been unable to retest their late April highs. If global risk sentiment turns negative, sugar may be vulnerable to a sizable near-term pullback. A mild rebound in the Brazilian currency provided the sugar market with carryover support as that should ease pressure on Brazil’s Center-South mills to produce sugar instead of ethanol. Energy prices extended their recovery move with moderate gains on Tuesday, and that may give an additional boost to ethanol demand prospects.
Interested in more futures markets? Explore our Market Dashboards here.
Risk Warning: Investments in Equities, Contracts for Difference (CFDs) in any instrument, Futures, Options, Derivatives and Foreign Exchange can fluctuate in value. Investors should therefore be aware that they may not realise the initial amount invested and may incur additional liabilities. These investments may be subject to above average financial risk of loss. Investors should consider their financial circumstances, investment experience and if it is appropriate to invest. If necessary, seek independent financial advice.
ADM Investor Services International Limited, registered in England No. 2547805, is authorised and regulated by the Financial Conduct Authority [FRN 148474] and is a member of the London Stock Exchange. Registered office: 3rd Floor, The Minster Building, 21 Mincing Lane, London EC3R 7AG.
A subsidiary of Archer Daniels Midland Company.
© 2021 ADM Investor Services International Limited.
Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. The information and comments contained herein is provided by ADMIS and in no way should be construed to be information provided by ADM. The author of this report did not have a financial interest in any of the contracts discussed in this report at the time the report was prepared. The information provided is designed to assist in your analysis and evaluation of the futures and options markets. However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to ADMIS. Copyright ADM Investor Services, Inc.
