ADMIS News
COFFEE
September Coffee backed off from Monday’s high yesterday, as the market continued in to struggle to break out of its consolidation. Dry conditions in Brazil and Vietnam are dominating the market this week. A drought in Vietnam has been described as the “worst in a decade,” and this follows a disappointing crop last year. Long-range forecasts calling from hot and dry July and August in Southeast Asia does not help their outlook. However, the 15-day rainfall forecast for Minas Gerais, Brazil shows slightly above normal rainfall for a change. There is a chance of frost for southern Parana over the next 10 days, which could include some coffee growing areas, but it does not extend to Minas Gerais. ICE arabica stocks increased by 6,990 bags yesterday to 842,434. Recent Commitments of Traders data showed managed money traders were net long to 60,645 contracts, which is still historically large.
COCOA
September Cocoa extended this week’s selloff yesterday and fell to its lowest level since May 23. The market bounce hard off its lows of the day but still closed slightly lower. Sellers may have gotten ahead of themselves, as there really was not any news this week to change the status quo, except for a lack of new threats to the crop that would bring in new buyers. The recent mix of seasonal rainfall with periods of sunshine in Ivory Coast and Ghana has been reportedly good for pod development and tree health. However the current supply situation remains very tight, and until pod counts start to come in, traders are left with only an “idea” that the crops are doing better. Recent Commitments of Traders data showed managed money traders holding a net long of 25,675 contracts as of last Tuesday, which is at the low end of the historic range and keeps the long liquidation threat down. Blommer Chocolate launched “Elevate” on Tuesday, a product it says is a cheaper alternative to cocoa butter and is made from palm kernel and sunflower oils.
COTTON
Looking past the improving crop prospects, December Cotton extended its rally to trade to its highest level this month yesterday. With the managed money position approaching a record net short as of last Tuesday, there was plenty of fuel for a short covering rally, and the Acreage report this Friday offers potential for a bullish surprise. The Delta and the southeastern US are seeing some rain this week, but the 6-10-day and 8-14-day outlooks show a significant heat wave centered over the southeast US with below normal chances of rain. West Texas looks a little less hot with normal to above normal rainfall. For Friday’s USDA acreage report, a Reuters poll has an average trade expectation of 10.829 million acres planted (range 10.5-11.2 million). This would be up from 10.673 million in the March intentions report and 10.23 million in 2023.
SUGAR
Hot and dry conditions in Brazil and Thailand have lowered expectations for their cane crops and have helped the sugar market form a low over the past month. The long range forecasts call for an extended hot and dry trend for Thailand in July and August, and there is little rain in sight for Center South Brazil. Wet conditions in western Europe have lowered expectations for their beet crop. The EU crop monitoring service Mars lowered its sugar beet yield forecast to 74.4 metric tons per hectare from 75.4 in their May forecast this week. The Indian Monsoon stalled earlier this month, but it is coming back, and this could help their rainfall totals meet previous expectations for above-average levels this year. The steady uptrend in crude oil over the past month has lent support to sugar as well. The Tiplam terminal at Brazil’s Port of Santos has resumed loading after being shut down from a fire last Thursday. The Unica update on Brazil’s sugar production for the first half of June should be coming any day. The previous report showed cumulative production as of June 1 for the Center-South region was 11.8% above a year ago, but second-half May production was down 7.7% from last year, while the cane crop was down 3.4%, which meant that the “sugar mix” was falling.
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