ADMIS News
SUGAR
The sugar market is drawing support on concerns about dry conditions in Brazil and a strong Brazilian currency (the real) that is reducing the incentive to sell sugar for export. Soil moisture in Brazil’s main sugar belt fell to the lowest in the last seven years after the dry spell in February and early March, according to LSEG Agriculture Weather Dashboard. The nearby Brazilian real reached its highest level since October on Wednesday. Recent UNICA reports have shown Brazilian ethanol production running above year ago levels despite lower cane crush. We are at the end of the 2024/25 production year, and crushing activity is practically nil, but this trend in crushing for ethanol will be something to watch as the new season gets underway next month. A strong currency makes it relatively more attractive to sell ethanol, which his consumed domestically, than it is to sell sugar, which is exported for the most part. The director general of the Indian Sugar & Bio-Energy Manufacturers Association (ISMA) told Reuters yesterday that India likely to start the new sugar season in October with “comfortable” opening stocks of 5.4 million metric tons, which he said would be more than sufficient to meet demand for October and November, despite lower-than-expected production and exports of 1 million tons this year. In contrast, the All India Sugar Trade Association said last week that opening stocks could fall to 3.78 million tons from 8 million tons a year ago. News earlier this year that India would allow exports of 1 million tons for 2024/25 helped drive the market to its January lows. Since then, some analysts have lowered their export expectations due to high domestic prices and on reports of early mill closings that suggested supply was not as strong as previously believed.
COCOA
May Cocoa was near unchanged overnight as it continued to consolidate near four-month lows. Reports this week that Ivory Coast could see a 40% drop in mid-crop production this year have failed to spark a rally, perhaps because this was already in the market or because that the ICCO may have already considered this when they forecast a 142,000-ton global surplus for 2024/25 when they released their quarterly update at the end of last month. Inasmuch as the surplus was predicated on a 235,000-ton drop in grindings as well as a 351,000-ton increase in production, the quarterly grindings numbers due to be released on April 17 gain importance in traders’ minds. The low forecast for Ivory Coast mid-crop production is based on dry conditions earlier this year, which will be hard to reverse. That being said, World Weather Service expects Ivory Coast and Ghana to see regular rounds of showers and thunderstorms and mostly favorable conditions through the next week, which could support production later in the season. ICE certified cocoa stocks fell 1,702 bags yesterday to 1.768 million. This was their first decline in 11 sessions, which could get sellers to back off. Stocks are up 128,000 from a week ago. The executive secretary of the Ivory Coast-Ghana Cocoa Initiative said yesterday that the decline in production for the two nations is significant and that it is clear that climate is causing swollen shoot disease to spread.
COFFEE
Representatives with the Brazilian coffee co-op Cooxupe said in a conference call yesterday that the below-average rain and high temperatures in February and early March will adversely affect the 2025 crop. Some areas in Minas Gerais and Sao Paulo states went more than 40 days without rain, and they faced temperatures above the historical averages. Cooxupe farmers are a month or so away from the start of the harvest. Expectations for 2025 were already down because of the extended drought and extreme heat in 2024 that sapped trees of energy. The Cooxupe representatives added that the 2026 crop could be affected as well but that the impact is still hard to measure. 2025 is the off year in the biennial cycle for Brazil’s arabica crop, so a lot is riding on a strong crop in 2026. World Weather Service says rain is expected most days in the coming week to ten days in at least a part of all coffee production areas. The majority of crop areas should eventually be impacted and amounts will be sufficient to offer some relief to recent dryness. However, most of the precipitation will remain light and only occasionally moderate, but no general soakings are expected. According to the LSEG Agriculture Weather Dashboard, soil moisture in South Minas Gerais is the lowest level it has been for this period in seven years. Robusta prices in Vietnam rose this week as traders held back on sales. ICE certified arabica stocks fell 159 bags yesterday to 782,689, their lowest since February 20. Stocks have declined for five straight sessions and are down 19,788 for that period.
COTTON
May Cotton backed off from the 50-day moving average this week, as apparently the trade is still skeptical that US exports can maintain a strong pace once prices rise. World Weather Service says South Texas and the Coastal Bend region could see rains of 0.50 to 1.50 inches next week (possibly a few amounts over 2.00 inches). These rains are badly needed to get planting underway and get the crop there off to a strong start. The weekly US drought monitor released yesterday showed approximately 33% of US cotton production was in an area experiencing drought, which was steady with last week but an improvement over 38% from two weeks ago. Areas of dry conditions expanded in West Texas but got smaller in Georgia and the Carolinas. The Delta has ample moisture. Yesterday’s export sales report was a disappointment, with net sales of 101,058 bales for the 2024/25 (current) marketing year and net sales of 57,870 for 2025/26 for a total of 158,928. for the week ending March 13. This was down from 381,990 the previous week and the lowest since January 2. Shipments totaled 351,003 bales, down from 403,461 the previous week but the second highest since the marketing year began in August. The largest buyer this week was Vietnam at 73,051 bales (current and new crop combined), followed by Turkey at 26,859, Pakistan at 22,658, and Guatemala at 20,917. Guatemala’s were mostly new crop (19,184). China canceled 49,337 bales.
Interested in more futures markets? Explore our Market Dashboards here.
Risk Warning: Investments in Equities, Contracts for Difference (CFDs) in any instrument, Futures, Options, Derivatives and Foreign Exchange can fluctuate in value. Investors should therefore be aware that they may not realise the initial amount invested and may incur additional liabilities. These investments may be subject to above average financial risk of loss. Investors should consider their financial circumstances, investment experience and if it is appropriate to invest. If necessary, seek independent financial advice.
ADM Investor Services International Limited, registered in England No. 2547805, is authorised and regulated by the Financial Conduct Authority [FRN 148474] and is a member of the London Stock Exchange. Registered office: 3rd Floor, The Minster Building, 21 Mincing Lane, London EC3R 7AG.
A subsidiary of Archer Daniels Midland Company.
© 2021 ADM Investor Services International Limited.
Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. The information and comments contained herein is provided by ADMIS and in no way should be construed to be information provided by ADM. The author of this report did not have a financial interest in any of the contracts discussed in this report at the time the report was prepared. The information provided is designed to assist in your analysis and evaluation of the futures and options markets. However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to ADMIS. Copyright ADM Investor Services, Inc.
