ADMIS News
SUGAR
July Sugar has reversed lower this morning and could see some mild profit taking heading into the weekend. The market broke above a two-week consolidation this week, which is bullish technical action. Australian sugar industry representatives are worried that half of their nation’s cane crop could be left unharvested if refiners don’t get their labor disputes resolved soon. Australia is the world’s fourth largest exporter. The India Meteorological Department said monsoon rains have advanced into the western state of Maharashtra after covering almost all of the southern region but that they could weaken and deliver below normal rainfall next week. Maharashtra is India’s biggest producer of sugar. The IMD said India has received 7% more rainfall than normal since the season began on June 1. LSEG research reported that Central/North/Northeast Thailand saw rainfall of 20-100 mm above normal over the past two weeks, which could help replenish dry soils and improve cane yields, but they also said that more good rain is needed. India’s prospects are looking better with the departure of El Niño, but the government is also interested in boosting ethanol production, which may make them less inclined to allow a substantial boost in imports this year.
COFFEE
July NY Coffee pushed through last week’s high yesterday but settled way off the highs of the day and was weaker overnight. July London Coffee reached a new contract high but also seemed to reject it. Trading firm Czarnikow said the tightness in robusta supply has come about because production has been unable to respond to a big expansion in demand post-Covid. Vietnam is expected to benefit from the departure of El Nino and the arrival of La Nina later this year, which is expected to bring better rainfall, but in the meantime the market must contend with tight supplies. Brazil exported 243,900 tonnes of green coffee in May, up from 141,085 for the same period last year. Weather forecasters say Brazil could see its first cold snap by the middle of this month. ICE exchange stocks totaled 798,683 yesterday, unchanged from Wednesday and up from 659,758 at the end of April.
COCOA
July Cocoa is close to taking out Monday’s high, which came off a bullish ICCO report last week. The market is watching weather in west Africa to see how the mid-crop is progressing after extreme heat and dry conditions this spring dried soils and stressed trees. Average weekly temperatures in Ivory Coast have been consistently running at the high end of the five-year range since February, and that situation has continued this week. Precipitation has been at the low end of the five year range. There was a slight increase in rainfall this week, but it was still the lowest in five years. The ICCO report last week showed a global deficit of 439,000 tonnes for 2023/24 versus 374,000 in their first quarter update. Production was increased by 11,000 tonnes, but grindings were increased by 76,000.
COTTON
December Cotton is back lower this morning and appears ready test yesterday’s 18-month low. The US crop is seeing good weather. The weekly US Drought Monitor indicated that approximately 6% of the US crop was in an area experiencing drought as of June 4, up from 5% the previous week. This was the first weekly increase since April 9 but still very low. A year ago 19% of the crop was affected, and two years ago that number was 51%. There was a slight expansion in abnormally dry conditions in west Texas last week, but most of the major areas in remain unaffected by drought. The 6-10 and 8-14 day forecast show normal chances of rain for west Texas. The northern Delta shows below normal rainfall, but that could be a relief to growers. The export sales report yesterday was not very impressive. Cumulative sales for 2023/24 have reached 107% of the USDA forecast for the marketing year versus a 5-year average of 111% at this point in the season. The largest buyer this week was China at 73,891 bales, followed by Vietnam at 46,196. The IMD said India has received 7% more rainfall than normal since the season began on June 1, but officials said the monsoon would pause for a few days. A weak jobs report today could support the market on ideas is could move the Fed to lower rates sooner than expected.
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