ADMIS News
COCOA
Cocoa prices will start out this week at the lowest level since early December. While near-term demand concerns have been given additional fuel by the negative shift in global risk sentiment, a bullish supply outlook can help cocoa prices find their footing. For the week, September cocoa finished with a loss of 73 points (down 2.9%). Continued deterioration in global risk sentiment was given a significant boost by multi-decade highs in the US CPI index. This has become a notable source of pressure on the cocoa market as surging inflation is likely to weaken near-term demand prospects due to chocolate, as it is a mostly discretionary purchase for many global consumers.
COFFEE
Near-term demand concerns have become a notable source of pressure and the bearish tilt to outside market forces added to the negative tone. For the week, September coffee finished with a loss of 3.75 cents (down 1.6%) which broke a 4-week winning streak. A more than 1.5% loss in the Brazilian currency as it reached a 3 1/2 week low on Friday was a notable source of pressure on coffee prices, as extended currency weakness could encourage Brazil’s farmers to market their near-term supply to foreign customers.
COTTON
The USDA supply demand reports had no changes for the US 2022/23 outlook, but it did come in at the bullish end of expectations, which had called for an increase in production and ending stocks. The report put production at 16.50 million bales versus an average expectation of 16.77 million (range 16.00-17.90 million) and ending stocks at 2.90 million versus 3.11 million expected (range 2.60-4.00). A hot CPI number and a low consumer sentiment reading contributed to concerns about domestic consumption. The 1-5-day forecast calls for little or no rain in Texas, and the next two weeks could be critical.
SUGAR
Sugar has been pressured by recent weakness in key outside markets, and has reached its lowest price levels since mid-May. Unless there is a positive turnaround in global risk sentiment, sugar may continue to slide further to the downside as the market is vulnerable to long liquidation selling.
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