ADMIS News
SUGAR
Bearish supply developments from south Asia have weighed on sugar prices, but potential production issues in Brazil may help the market maintain upside momentum this week. May sugar once again approached the 50-day moving average and backed off from that level on Friday. Dry conditions in Brazil over the past several months has raised concerns about the upcoming cane crop, but traders now worry that the forecast for regular rain through the middle of next week could delay the start of the 2024/25 harvest. Many analysts are increasing their 2023/24 global surplus forecasts due to better than expected late-season output from India and Thailand, but they get a better picture on their 2024/25 cane crop, India’s government is likely to leave their sugar export ban in place.
COCOA
The long uptrend in the cocoa market continues, with the May contract trading to new all-time highs for the third straight session overnight. The market is up 3139 for the month so far, a 52% gain. This suggests an overbought condition, but commercial buying continues to support the market in the face of tight global supplies and low expectations for the West African mid-crop. Rainfall is in the forecast for West African growing regions most days this week, which could benefit production later in the season. Demand has been resilient in the face of record prices, but there will be articles in the mainstream media in front of the Easter holiday on the high cost of chocolates that may remind some buyers of the potential for reduced demand.
COFFEE
May coffee continues to see choppy, sideways action with no trend. The market finished last week with a gain of 1.90 cents (up 1%) and a third positive week of the past four. Dealers said robusta supplies remain tight in top producer Vietnam, but the start of the harvest in Brazil next month could bring some relief. There is a growing consensus that Brazil will see bigger production in the 2024/25 marketing year, which would mark the third year in a row with an increase. The chairman of Illycafe predicted that coffee prices will decline during the second half of the year, as there are no issues seen on the production side.
COTTON
Traders have grown concerned about the potential for a drop in exports as the Southern Hemisphere crops become available, but they may also be reluctant to push too far down ahead of the USDA Prospective Plantings report on Thursday. The dollar closed strong last week, which does not bode well for US exports. The export sales report last week showed strong deliveries at 397,297 bales, the highest since April 27, 2023. US soil moisture is much better than it was a year ago, which could encourage heavier plantings this spring. As of last week, approximately 7% of US cotton production was within an area experiencing drought versus 46% a year ago.
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