ADMIS News
COTTON
Cotton bulls had been hoping to see increased business ahead of the lunar new year, and they got it. March cotton rallied sharply on Friday in the wake of a bullish export sales report and traded to its highest level since October 30. US cotton export sales for the week ending January 11 came in at 437,647 bales, up from 284,478 the previous week and the highest since November 2. Cumulative sales for 2023/24 have reached 9.306 million bales, up from 9.068 million a year ago but below the five-year average of 11.046 million for this point in the marketing year. Sales have recently crossed above year-ago levels for the first time this marketing year. West Texas could receive some rain in the coming week, which could help recharge some areas that are still abnormally dry. The Delta is too wet. Australia, especially Queensland, is expected to receive significant rain this week due to the latest cyclone, but Argentina is not expected to get much rain for a while, which could lead to crop stress. The S&P 500 reached new all-time highs last week and saw further gains overnight, which is supportive to cotton.
COFFEE
The NY coffee market has drawn support from tight Robusta supplies as well as strong economic data, specifically in the US, which is viewed as bullish for demand. The Houthi attacks on cargo ships in the Red Sea have slowed shipments of Vietnamese Robusta beans to Europe, forcing European buyers to look to Brazil and other areas, and this has lent support to the Arabica market as well. Colombia’s fourth quarter output surge brought their 2023 production to 11.347 million bags, was their largest 12-month running total since November 2022. However, output remains well below their annualized pace from 2015 through 2021.
COCOA
Last week’s fourth-quarter grind totals for Europe, Asia, and North America were all down from year ago levels, yet the cocoa market responded with a rally to new 46-year highs. The 2.5% year-over-year decline for European grindings was near the low end of expectations calling for a decline of 2-5%. North America saw a 2.95% decline versus expectations calling for declines of 6%-10%. The rebound in global consumer sentiment and a move to new all-time highs for the S&P 500 are viewed as supportive to demand. European and US equity markets were higher again overnight. Ivory Coast port arrivals totaled 41,000 tonnes for the week ending January 21, down from 64,000 a year ago. Total arrivals since the season began on October 1 have reached 995,000 tonnes, down 36% from last year.
SUGAR
Czarnikow is forecasting Mexico’s 2023/24 sugar production to come at 4.7 million tonnes, down 15% from 2022/23 and their lowest in 10 years. They are blaming poor cane development this year due to insufficient rain as well as poor yields during processing. Mexico is the largest source of US sugar imports, with the USDA projecting 836,000 metric tonnes to be shipped to the US during the 2023/24 season. This suggests that Mexico will have to import from Central America to fulfill its export quota to the US. Last year they imported heavily from India, but India’s drop in production this year is expected to keep them out of the export market. India’s 2023/24 production was 7% behind the previous season’s pace as of last Monday. Another cyclone is expected to hit Australian cane-growing areas this week after a previous one brought flooding to some areas. Traders are expressing concern that the dry weather in Brazil will hurt upcoming cane production.
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