ADMIS News
COTTON
US cotton crop ratings are better than last year, and soil conditions in Texas have improved greatly over the past several months, thus the market does not seem to see a threat from a hot and dry forecast for West Texas. The five-day forecast has light to moderate rainfall, but the seven-day has above normal temperatures, below normal precipitation, and a moderate loss of soil moisture in the region. This suggests that soil conditions could deteriorate over the next week or two. The July contract led the market lower on Wednesday and again overnight. There have been concerns voiced that some farmers have not priced last year’s crop and that there could be some additional pressure on July cotton ahead of first notice day on June 26. July may have also been pressured by concerns about near term demand.
COCOA
The cocoa market continues to find support from a tight supply outlook, but the large net long held by speculators has traders concerned about a pullback. There has been no classic technical top indicator, and the market’s recovery from a weak start on Wednesday to close higher on the day could be viewed as technically bullish. The market has drawn support recently from heavy rains in West Africa that have slowed harvest, interrupted transportation, and raised concerns about bean quality. However, a dry period last week has eased those concerns. There have been more beans diverted to Ivory Coast’s domestic cocoa processing industry this season, which will result in less cocoa entering the global export marketplace. The recently-started El Nino weather event is expected to bring drier than normal conditions to West Africa and southeast Asia, which could tighten the global supply further next year.
COFFEE
Coffee continues to be pressured by bearish supply developments in Brazil. Brazil’s coop Coopuxe said harvest had been completed in 22% of the fields managed by associated farmers in the states of Minas Gerais and Sao Paolo versus 14% this time last year and 17% in 2021. They also said fieldwork had been quicker because of a more concentrated flowering period, which led to a more uniform maturing stage for coffee berries. September coffee extended its downside breakout on Wednesday to a new 2-1/2 month low and finished with a heavy loss. While Brazil’s has seen cooler weather in recent weeks, this has not led to any widespread delays in the harvest.
SUGAR
The Brazilian cane harvest continues to make good progress, which is keeping a lid on prices. Copersucar, the world’s largest sugar and ethanol merchant, said it expects its sugar sales in 2023/24 to increase 27% from 2022/23, boosted by an increases in sugarcane crushing and a higher allocation versus ethanol. Other sources stated that Brazilian mills are directing as much cane as they can towards sugar production as sugar prices hold near 12-year highs. Brazilian Center-South sugar production during April and May was 37.7% larger than last year. India’s monsoon is expected to regain momentum by the end of this week, and it should reach cane-growing regions in the states of Karnataka and Maharashtra by the end of next week, which would benefit the 2023/24 cane crop.
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