ADMIS News
SUGAR
July Sugar extended yesterday’s selloff overnight and fell to its lowest level since March 7, as the “trade wars” have caught up to this market. Sharply lower crude oil today and a decline in the Brazilian real to its lowest level since January puts additional pressure on sugar. The weaker real increases the incentive to export Brazilian sugar, and weak crude oil reduces the incentive to crush cane for ethanol. The lack of news from Brazil and India keep sugar’s focus on outside market forces.
COCOA
July Cocoa extended the week’s losses overnight but managed to hold above the 200-day moving average, which acts as an initial support level today. After a brief rally last week off concerns about the Ivory Coast mid-crop, the market has reversed and traded back to its lowest level since November in the wake of the tariff announcements and as a trade war between US and China has escalated. The market was already concerned about demand after prices hit all-time highs in December, and the tariff news only lowers demand expectations further. The next official grain data will be the first quarter number due to be released a week from tomorrow. ICE certified stocks increased 255 bags yesterday to 1.857 million. World Weather Service expects an “erratic’ rainfall pattern in West Africa from Ivory Coast to Cameroon and Nigeria during the next week to ten days. Growers would prefer more rain to boost pod development.
COFFEE
July Coffee extended the recent selloff by gapping lower overnight and trading to its lowest level since January 23. The tariff news has pushed concerns about Brazil’s crop to the background, as traders are now worried about demand. Demand concerns were already in the air after prices reached all time highs in February. Technical indicators also suggest the market put in a major top when it broke below a consolidation pattern on Friday and Monday. Brazil could see some increased rainfall today and tomorrow, but the wetter trend is not expected to last long, and this keeps concerns about the Brazilian arabica crop alive, if not front of mind. The deluge of tariff news is keeping traders on the defensive. Brazilian robusta exports to the US could benefit from their relatively low tariff of 10% versus 46% for Vietnam, but things could change quickly. There were indications that Vietnam was ready to work out a deal to get a lower tariff, but that news has been pushed aside by the latest escalation by the US and China and talk that the US Congress may intervene in the tariff decisions. ICE certified stocks increased by 7,020 bags yesterday to 780,806. After reaching its highest level since October last week, the Brazilian real has fallen to its lowest level since January, which increases the incentive for roasters to sell.
COTTON
July Cotton was lower overnight but well off Friday’s contract lows. The escalation of the trade war between the US and China may be less of a threat than the high tariffs on Vietnam because China has reduced its purchased of US cotton in recent years. Also, Vietnam has at least expressed an interest in reaching a compromise. Still the trade war threatens to shut down trade and induce a global recession unless some deals are made, and this has traders concerned about demand. Not many changes are expected for the USDA supply/demand report tomorrow. The Bloomberg poll has an average trade expectation for US 2024/25 cotton production at 14.41 million bales, which would be unchanged from the March report, and ending stocks at 4.91 million (range 4.60-5.20) versus 4.90 million in March. World ending stocks are expected to come in around 78.41 million bales (range 77.25-80.00) versus 78.33 in March. The first report for 2025/26 will be released in May.
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