ADMIS News
SUGAR
The 2024 recovery in the sugar market remains intact, as prices recovered overnight after a minor setback yesterday. March sugar is under the bullish influence of a move above the 21-day moving average earlier this month and a breakout above resistance at 22.00 this week. The Brazilian real has declined 1.5% so far this week, but that does not appear to have pressured sugar prices. The Brazilian trade group Unica said that they expect 2024/25 Center-South cane crop to be “good,” which may have weighed on prices yesterday. However, after a 29% decline from November’s high to last month’s low, the market appears to have absorbed the large Brazilian crop for 2023/24, and the 2024/25 crop is still off in future. With the Brazilian harvest winding down, the focus has shifted back to lower Asian output this year and relatively tight global supplies.
COCOA
European fourth-quarter cocoa grindings data released overnight came in at 350,739 tonnes, down 2.5% from the same period in 2022. Traders were expecting a decline of 2%-5%. Asian grindings totaled 211,202 tonnes in the fourth quarter, down 8.5% from 2022. Their total grindings for 2023 reached 858,675 tonnes, down 5% from 2022. March cocoa fell on the news but quickly recovered back to yesterday’s contract highs. Traders seem to view the drop in grindings as a reflection of tight supply rather than soft demand. Next up is North American grindings, which are also expected to decline. Major West African growing nations are looking at a sharp drop in production this season.
COFFEE
March coffee fell below key technical support levels yesterday, suggesting further weakness ahead. A setback in London Robusta futures after reaching their highest level in 29 years earlier in the week pulled support from the NY Arabica contract. The Houthi attacks on ships in the Red Sea are threatening Robusta deliveries to Europe, and there are reports that shipping costs have increased by 150%. There are also ongoing reports that Vietnamese growers are reluctant to sell as they hold out for higher prices. ICE Robusta stocks have fallen to historic lows, but Arabica stocks increased by 8,150 bags yesterday, and they are now more than 16,000 bags above where they were at the end of December.
COTTON
Cotton traders have turned optimistic this week towards demand. The market has seen choppy action, but it has been maintaining a slight uptrend off the December low, and yesterday it traded to its highest level since December 8. A larger than expected increase in US retail sales for the month of December lent support, especially the 1.5% increase in clothing store sales. Other data showed China’s economy grew 5.3% in 2023, which was above the official target. Traders are hoping that Friday’s export sales report will show strong sales to China. Last week’s report showed the US sold 284,478 bales for the week ending January 4, of which 117,862 were destined for China. Traders are hoping there may be some more export business ahead of the Lunar New Year.
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