ADMIS News
COTTON COMMENTARY
The USDA supply/demand report was disappointing for the bulls, particularly the world data. May cotton initially reacted negatively to the report but recovered to close only slightly lower on the day. In the report, US 2022/23 ending stocks were left unchanged from last month at 4.30 million bales versus an average trade expectation of 4.26 million and a range of expectations from 4.05 to 4.50 million. World ending stocks came in at 91.15 million bales, which was above the average expectation of 89.07 million (range 88.37-90.00) and up from 89.08 million in February. World production was revised higher to 115.09 million bales from 114.37 million previously, and world usage was revised down to 110.11 million from 110.66 million. China’s production increased by 1 million bales and Australia’s by 500,000. India’s output fell 1 million bales.
COCOA COMMENTARY
Although there has been a mild rebound in global risk sentiment, cocoa’s demand concerns remain a front-and-center issue for the market. While this could fuel additional long liquidation, cocoa’s bullish supply developments can help to underpin prices. European and US equity markets remained subdued after a second day of Fed Chair Powell’s congressional testimony, which diminished cocoa’s near-term demand outlook.
COFFEE COMMENTARY
With the market approaching a retest of its early February lows, coffee could see a sizable downside move. Concern over restaurant and retail shop consumption due to stubbornly high inflation continues to weigh on coffee prices following Fed Chair Powell’s second day of congressional testimony. A rebound in Central American coffee exports has also pressured coffee prices, as that supply will help to offset the recent pullback in Brazilian and Colombian exports. Brazil’s 2023/24 Arabica harvest will reach full speed by mid-May which will provide the market with fresh supply, but delays with planting their Safrinha corn crop could result in supply bottlenecks at Brazil’s ports later this year.
SUGAR COMMENTARY
With the market receiving bearish supply news on upcoming Brazilian production, sugar needs to find additional support from key outside markets in order to extend its 2023 rally. A sizable pullback in crude oil and RBOB gasoline prices put carryover pressure on the sugar market as that should weaken near-term ethanol demand in Brazil and India. However, a more than 1% rally in the Brazilian currency to a 4 1/2 month high provided sugar with late support and helped to keep further losses in check.
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