ADMIS News
COFFEE
Since stopping a four-session losing streak last Tuesday, coffee prices have seen wide-sweeping coiling action. March coffee fell back to the 50-day moving average on Friday but bounced off it, and that line could be a key support level today. Recent missile and drone attacks on ships traveling through the Red Sea have disrupted Robusta shipments from Vietnam and Indonesia to Europe, with reports of delays up to three weeks, and this has brought nearby London prices to their highest level since 1994. However, NY (Arabica) prices have stalled. There have also been reports of Vietnamese farmers “hoarding” beans, waiting for higher prices. The Brazilian trade group Cecafe said that their nation’s Arabica exports totaled 3.26 million bags in December, up 14.8% from year-ago levels. They also said that logistical issues prevented them from exporting an additional 2 million bags last year.
COCOA
The cocoa market could be pressured as demand concerns increase, and this can be magnified by the fact the priced have doubled since September 2022, but evidence that demand has stayed resilient despite high prices has helped the market maintain upside momentum. Major chocolate retailer Lindt and Spruengli reported a 10% increase in sales during 2023 from the previous year. A portion of the increase was due to higher prices they received, but the news also suggests that consumers have been willing pay up for their chocolates. March cocoa traded to a new contract high yesterday and came close to taking out the 46-year high on the nearby chart. Above-average rainfall in West African growing areas for a second week during the region’s typical dry season could improve the prospects for the mid-crop, which usually begins to be harvested in April. North American and European grinding stats are due to be released on Thursday, and traders could grow cautious ahead of the numbers.
COTTON
March cotton prices were resilient overnight against a turn lower in the stock market and a stronger dollar. The market has been trading in a sideways pattern since early November, after the US harvest was mostly completed and the focus shifted to global demand. The dollar gapped higher on Tuesday and traded to its highest level since December 13, after Fed member comments seemed to suggest that there would be fewer rate cuts in 2024 than the market was hoping for. The move higher in the dollar starts a second leg higher off the December low and indicates an uptrend is intact. This could be worrisome to those hoping to see stronger US cotton exports. The USDA lowered its global consumption forecast on Friday, which was a disappointment for those hoping for stronger demand, but the market appears to have absorbed that news and appears to be on its way to test Friday’s high.
SUGAR
March sugar broke through key round number resistance at 22.00 yesterday, leaving it in a position to mount a more significant, corrective rally off the December lows. India has announced a 50% export duty on molasses that is extracted from sugar refining this week, as they try to maintain adequate sugar supply for domestic consumption while also supporting ethanol production by promoting the use of molasses for that purpose. This would seem to reduce the chance that that their export embargo of raw sugar would be lifted in the foreseeable future. Indian mills produced 14.87 million tonnes of sugar between October 1 and January 15, a 7% decline from year-ago, the National Federation of Cooperative Sugar Factories reported. They attributed the decline to lower output in the key producing states of Maharashtra and Karnataka. There are indications that Brazilian Center-South cane harvesting and crushing activity will finish for the season by the end of the month, which is about two months later than normal.
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