ADMIS News
COCOA FUTURES
Cocoa supplies are tight, and the trade worries that the production deficit will get even tighter, but after making a 380-point, 13% gain since the end of May, the market could be vulnerable to increased volatility and sharp swings. West African supply remains relatively tight after three months of their midcrop harvest. Ivory Coast port arrivals came in at 19,150 tonnes for the week ending July 2, bringing the 2022/23 marketing year total to 2.24 million tonnes, down from 2.29 million a year ago. There are reports that recent heavy rainfall has fueled the spread of black pod disease in Ivory Coast, Ghana and Nigeria that could have a negative impact on this season’s midcrop and next season’s main crop production.
COFFEE FUTURES
Coffee has seen a steep selloff since early June as the Brazilian harvest has advanced, but their output is still behind last year, and the world second largest producer, Colombia, still seems to be suffering the effects of La Nina, which ended in March. Safras and Mercado estimated that the Brazilian coffee harvest was 45% complete as of last June 27 versus a 5-year average of 48% on that date. Brazil’s June coffee exports came in at 138,815 tonnes (2.314 million bags), down from 180,871 tonnes (3.016 million bags) last year. Colombia’s output pace is at a 9-year low. Costa Rica’s June coffee exports were down 7.4% from last year, but Honduran exports were 37% higher, due in part to stronger demand after delayed shipments in May.
COTTON FUTURES
The US cotton crop is in decent shape and appears to be right on time, but a hot and dry forecast for west Texas could start to erode conditions. The weekly Crop Progress report showed 48% of the US cotton crop was rated good to excellent (G/E) as of July 2, down from 49% the previous week but up from 36% a year ago and very close to the 10-year average of 49%. Texas came in at 34% G/E, up from 32% the previous week, and 17% a year ago, and just shy of the 10-year average at 36%. Of 15 selected states, 42% of the crops were squaring as of Sunday versus 42% a year ago and on average, and 12% were setting bolls versus 11% a year ago and on average.
SUGAR FUTURES
The sugar market has received some bullish news this week, but strong production out of Brazil and Europe could limit further gains. The market has seen a sharp bounce off 2-1/2-month lows and has recovered one-third of its losses from an 8-session losing streak in late June. News that India’s June monsoon rainfall was 13% below their long period average has underpinned prices this week. The monsoon had a delayed start, but it recovered last week and managed to cover the entire nation a week earlier than normal. India’s Meteorological Department expects total monsoon rainfall to come in near the long period average. However, the arrival of El Nino has the trade concerned that rain amounts will be reduced, and the 13% decline in June seemed to heighten those worries.
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