ADMIS News
COTTON
March cotton managed to trade moderately higher early in the session yesterday, but bearish outside market forces took over to push the market lower on the session. A surge higher in the US dollar and a sharp break in crude oil were the primary bearish factors. Talk of increased producer selling into the New Year was seen as a bearish influence, and there is also uncertainty over just how quickly China’s economy can recover from their COVID issues. In addition, traders view the continued weakness in the stock market as a bearish force. Recent rain across the U.S. have improved drought conditions and this was also seen as a bearish factor as soils are especially dry in West Texas.
COCOA
While cocoa prices extended their late December pullback into 2023, a sizable rebound late yesterday indicates that a near-term low is close at hand. If global risk sentiment and key outside markets can regain their strength, cocoa should find decent support well before the market retests its December lows. Sharp selloffs in the Eurocurrency and British Pound put carryover pressure on the cocoa market, as their recent weakness will make it more difficult for European grinders to acquire near-term supplies. A much lower than expected German CPI reading reflected the pullback in European inflation levels, which combined with renewed strength in major European equity markets helped to support. The latest weekly reading for Ivory Coast port arrivals was slightly above the comparable period last year, which has kept their full-season arrivals total ahead of last season’s pace.
COFFEE
Coffee prices started the new trading year with a third negative daily result in a row, but the market continues to hold its ground within its recent consolidation zone. A lower than forecast German CPI reading showed continued easing of European inflation levels, which should provide a boost to coffee’s out-of-home consumption outlook in that region and provided early strength to the market. Brazil’s December coffee exports came in at 182,101 tonnes which was 12.3% below last year’s total despite the fact the 2022/23 season was an “on year” for Brazil’s Arabica crop. In addition, Honduran coffee exports last month were 15% below last year’s total which reflect the slow start to this season from Central American growing nations.
COTTON
March cotton managed to trade moderately higher early in the session yesterday, but bearish outside market forces took over to push the market lower on the session. A surge higher in the US dollar and a sharp break in crude oil were the primary bearish factors. Talk of increased producer selling into the New Year was seen as a bearish influence, and there is also uncertainty over just how quickly China’s economy can recover from their COVID issues. In addition, traders view the continued weakness in the stock market as a bearish force. Recent rain across the U.S. have improved drought conditions and this was also seen as a bearish factor as soils are especially dry in West Texas.
SUGAR
Sugar prices have been pressured by a negative shift in key outside markets, but also from bearish Brazilian supply news. As a result, the sugar market could see a sizable extension to this current selloff. Both crude oil and RBOB gasoline prices turned sharply to the downside, which put carryover pressure on the sugar market as that will diminish near-term ethanol demand. In addition, a sizable pullback in the Brazilian currency down to a 6 1/2 week low put pressure on sugar prices as that will encourage Brazilian mills to produce sugar for export. The new Brazilian government surprised many in the market by deciding to extend the exemption of several fuels from federal taxes, with gasoline’s exemption to continue through the end of February. While Center-South mills will be finished with this season’s crushing, those still operating are likely to have sugar’s share of crushing well above last season’s levels. As a result, this season’s Center-South sugar production should continue to climb above last season’s output total.
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