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USDA Show Tightening Cotton Ending Stocks


Cocoa prices have seen choppy action this week but in spite of recent bullish supply news, have been unable to prevent a further slide into new low ground. Unless there is a significant rebound in global risk sentiment, cocoa is likely to finish this week’s trading on a downbeat note. A huge selloff to a multi-decade low in the Eurocurrency was a notable source of carryover pressure on the cocoa market as that should negatively impact European near-term demand prospects.


Coffee prices were unable to sustain upside momentum, but they remain on track for a positive weekly reversal from Tuesday’s 6 1/2 month low. The Brazilian currency slid to a new 8 1/2 week low which put early pressure on the coffee market. While it recovered back to unchanged levels late in the day, it remains well below its April highs which will encourage Brazil’s farmers to market their remaining supply before the 2022/23 harvest reaches full speed.


July and December cotton closed higher yesterday after the monthly USDA supply/demand report came in on the bullish side of expectations. US cotton production for 2022/23 came in at 16.50 million bales versus an average trade expectation of 16.89 million (range 12.50-19.41 million). This is down from 17.52 million for 2021/22. US ending stocks came in at 2.90 million bales versus 3.57 million expected (range 1.80-4.50 million). This would be the lowest ending stocks since 2016/17. World production for 2022/23 came in and 121.06 million bales versus 122.09 expected, and world ending stocks came in at 82.82 million bales versus 83.74 million expected.


If the market can find fresh carryover support from key outside markets, sugar should be able to extend a recovery move. A pullback in the Brazilian currency was an early source of carryover pressure on the sugar market, but the Real’s late rebound after sugar’s close could provide early carryover support. Energy prices shook off early losses and climbed into positive territory, which in turn helped sugar to regain lost ground late in the day.

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