ADMIS News
COCOA
The weather in west Africa is still showing drier than normal conditions for key growing areas, which could add to the troubles for the mid-crop after the extreme heat and dry conditions this spring dried soils and stressed trees. Ghana does show a chance for improvement next week. Below normal precipitation is expected this week in Ivory Coast and Ghana. The 6-10-day forecast has above average rainfall in Ghana, and the 11-15-day has near normal rainfall. For Ivory Coast, the 6-10-day has near normal rainfall, with below normal in the 11-15-day. Soil moisture levels for both countries are running at or near the low end of seven-year ranges. Climate watchers are calling for La Niña to arrive in September and for it to be moderate to weak. ICCO recently widened its forecast for the global supply deficit in 2023/24. The buying trend is positive.
SUGAR
Sugar reversed lower on Friday on apparent profit taking heading into the weekend. The market is drawing support from concerns that dry conditions in Brazil could lower production there. Those dry conditions were conducive to harvest, and contributed to a strong start for their 2024/25 crop, but they could also contribute to lower yield as the season moves forward. The trade already got a hint of this from the UNICA report showing first-half of May output losing it strong lead relative to year ago levels. However, Brazil exported 2.81 million tonnes in May, up from 2.41 million a year ago. India and Thailand are hoping to see better production this year with the departure of El Nino. India’s monsoon rainfall has arrived 1-3 days early, but amounts are expected to ease back this week. The forecast for Center South Brazil shows very dry conditions over the next 15 days, with rainfall amounts of 0-1.9 mm versus 7 mm normal. Uttar Pradesh, India is also expected to be drier than normal, as is Queensland, Australia. Thailand and Maharashtra, India are leaning closed to normal. Sugar producers in Australia have warned that labor disputes a factories that produce more than half of Australia’s sugar could cause cane to be left unharvested if they are not resolved soon.
COTTON
December Cotton sold off on Friday after a stronger than expected jobs report sent the dollar sharply higher, which made recent longs nervous that it would hurt US export prospects. The US cotton crop looks in good shape at the start of the growing season, and the market has not seen much need to build a weather premium. This could change with the approach of a significant heat in wave. Last week’s Crop Progress report showed 61% of the US crop was in good/excellent condition versus 51% a year ago and a 10-year average of 46%. The next report is out after the close today. The US Drought Monitor last week indicated that approximately 6% of the US crop was in an area experiencing drought as of June 4 versus 5% the previous week, 19% a year ago and 51% two years ago. The forecast calls for rain of 1 to 2.5 inches in the Texas Panhandle and West Texas over the next five days. The 6-10-day shows below normal rainfall in west Texas, with normal conditions returning in the 8-14 day. A heat wave coming to the eastern half of the US and extending into Texas and the southwest would affect all of the cotton growing regions of the country, and it could dry soils in those areas that do not get adequate rainfall. India’s monsoon rainfall has arrived 1-3 days early, but amounts are expected to pull back this week.
COFFEE
July NY Coffee reversed and sold off on Friday after attempting to break out of a nine-day consolidation range last week, and it extended its declines overnight. The latest weather forecast shows extremely dry conditions are likely to occur over the next 15 days in Brazilian growing areas, particularly in the main growing region of Minas Gerais. Vietnam shows a good chance for above-normal rainfall, as does Colombia. Weather forecasters say Brazil could see its first cold snap by the middle of this month, and parts of Minas Gerais could be threatened by frost. ICE exchange stocks totaled 799,038 tonnes on Friday, up from 355 from Thursday and 14,267 the previous week. They are approaching their all-time high of 71,811 from April, which leaves the market vulnerable to heavy selling if support levels are taken out.
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