ADMIS News
COCOA
Cocoa prices have been dealing with demand concerns since the start of the COVID pandemic two years ago, but Tuesday’s setback was magnified by a broad-based washout in the commodity markets. The selloff in the energies fueled additional long liquidation across several commodity markets. Reports of expanding COVID lockdowns in China was a notable source of pressure yesterday, but improvements in Chinese tech stocks overnight after some soothing comments from the Chinese government may help cocoa avoid further declines today. Asia has been the big engine for demand growth in recent years with China is a major consumer and Indonesia and Malaysia the third and sixth largest cocoa processors in the world.
COFFEE
May coffee was up slightly overnight after falling for five straight sessions to nearly 50 cents below their mid-February high. A risk-on mood in the equity markets today could lend some support to coffee, especially after its steep selloff this past week. However, ICE exchange stocks continue to build, which supports ideas that global export bottlenecks are easing.
COTTON
The cotton market is caught between concerns about dry conditions in west Texas and worries about declining demand. Last week’s drought monitor showed moderate to extreme drought in west Texas as, and it does not look like there will be much of an opportunity for those conditions to change soon. While the 6-10-day forecast calls for normal slightly above normal precipitation in west Texas, conditions revert to below normal in the 8-14-day.
SUGAR
May sugar saw choppy action overnight that mimicked the action in crude oil. Some comments out of Russia today appeared to take a conciliatory tone, and crude oil and gasoline seemed to pull back on the news. Those markets were a higher earlier in the session, with some traders believing they had corrected enough this week. Sugar gapped below its recent consolidation zone yesterday, pressured by the selloff in crude oil on ideas it would weaken ethanol demand in Brazil and India.
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