ADMIS News
COTTON
July cotton was higher overnight, as the market seems to have fallen too far too fast after an 18% decline from its February peak. Last week’s USDA supply demand report held few surprises, but it did come in at the bullish end of expectations, with US 2023/24 ending stocks unchanged at 2.5 million bales versus an average expectation of 2.56 million and world ending stocks at 83.08 million bales versus 83.38 million expected. USDA left Brazilian and Australian production unchanged, but they did increase Brazilian exports to 11.7 million from 11.2 million in March and Australian exports to 6.00 million from 5.75 million. Crude oil was down overnight in the wake of the Iranian attack on Israel, as the damage was less than feared after the warnings of the past couple of weeks, but the rally in crude oil since the start of the year does lend support to cotton. However, the strength in the dollar undermines support as it makes US cotton more expensive on the export market.
SUGAR
The sugar market may draw some support today from a statement by an Indian senior food ministry official that the government is not considering allowing sugar exports for the 2023/24, despite requests to do so from sugar manufacturers. The key industry group ISMA had requested that exports be allowed in the wake of improved production reports since the start of the year. Last week, a government official said that they would like to see any additional cane output go towards ethanol production. The Indian government also reported today that it expects average monsoon rains in this year, with amounts coming in at 106% of the long-term average. Below average monsoon last year hurt sugar production, which is what led to the export restriction. Today’s statement confirms unofficial reports from last week.
COFFEE
July coffee closed well off its highs on Friday after reaching its highest level since January 2022, and this makes Friday’s high at 229.75 a formidable resistance area. Vietnam’s rainy season is normally well advanced by now, but a prolonged heatwave this year is viewed at damaging for their 2024/25 robusta crop. This follows a 2023/24 crop that is estimated to be down 20% from 2022/23. Houthi attacks in the Red Sea have forced shippers to take a much longer route around South Africa instead of the Suez Canal, and this has slowed the arrival of robusta supplies in Europe and forced European grinders to rely more on coffee from Brazil. There are also concerns about Brazil’s 2024/25 crop after heavy rains earlier this month reportedly damaged trees.
COCOA
After a lower close on Friday, July cocoa gapped higher overnight and traded to new a contract high, with the nearby contract trading to a new all-time high. Ivory Coast port arrivals for the week ending April 14 totaled 13,000 tonnes, down from 29,000 for the same week last year. The mid-crop appears to be starting out weak after the prolonged heat wave and record temperatures last month. The slow arrivals may also be reflecting growers’ frustration that the Ivory Coast marketing board, the CCC, was not more aggressive in raising the official farmgate price. Farmer groups are asking authorities for increase to 2,500 West African francs ($4) per kilo from the 1,500 ($2.50) announced earlier this month, which itself was an increase of 50% from the previous level. European and North American grind numbers are due to be released this week, and that may present an opportunity for some negative demand news. The trade is already expecting modest a decline due to lower availability of beans.
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