ADMIS News
COCOA
March cocoa traded to a new 46-year high yesterday and held those gains overnight. West African supply problems continue to provide support, with Ivory Coast port arrivals running well behind last year. As of Sunday, total arrivals for the 2023/24 marketing year, which began on October 1, had reached 481,000 tonnes, down 33% from the same period last year. West Africa is approaching its dry season, but excessive and untimely rain still seems to be a problem. There is more rain in the forecast late this week that could slow the harvest and drying of cocoa beans, and this would further diminish the flow to port facilities. Once the dry season arrives, production is expected to fall off even more. Strong rallies in the British Pound and Euro this past week have given the market additional support on ideas it increases the purchasing power for European grinders. Declining ICE exchange stocks are another bullish indicator. They have reportedly become an alternative for short-term supplies.
COFFEE
March coffee was slightly lower overnight after a private analyst firm forecasted Brazilian 2024/25 coffee production to reach an all-time high, despite concerns about the recent hot and dry weather. HedgePoint has forecast Brazilian production to reach 72.24 million bags in 2024/25, with Arabica production at 48.31 million and robusta at 25.93 million. Their report stated that do not think the recent hot and dry conditions weather will have much impact on the upcoming crop. Their forecast put 2024/25 global supply at a surplus of 3.38 million bags versus a deficit of 1.5 million in 2023/24. Most analysts are projecting a larger crop for 2024/25, but not all expect new records. Others don’t agree with the optimistic viewpoint of the crop, whit growers saying the first flowering has already been affected. A pattern of showers continued over central Brazil this past weekend, but they were more scattered and had less accumulation than is typical for this time of year. Rain is expected to be lighter this week but pick up early next week. ICE exchange coffee stocks rose by 2,830 bags on Tuesday for their first daily increase in several weeks. Stocks are down more than 95,000 bags so far this month, and they are on track for a tenth monthly decline in a row.
COTTON
March cotton broke below an 8-day consolidation this week, which leaves little in the way of technical support until the November 9 low. Traders are concerned about US export prospects, but the dollar falling to its lowest level since mid-August does offer some encouragement for the bulls. However, US cotton will still have to compete for export business, and that could keep a lid on the market unless problems develop for crops in Brazil or Australia. Ironically, dry conditions in Brazil are reportedly encouraging growers to plant cotton, which is more drought tolerant that corn and soybeans. The cotton market also drew support from strength in equities, bonds, and crude oil yesterday. Equity market strength boosts buying power for cotton goods; lower long-term rates support housing and home improvement sectors, which incentivizes the purchase of furniture, carpeting and other home goods made from cotton; and higher crude oil prices can make man-made fibers like polyester more expensive. Crude oil was higher overnight as traders awaited the outcome of the OPEC+ meeting.
SUGAR
The UNICA report this week confirmed that Brazilian sugar production is on a record pace, with first-half November output at an all-time high. Port congestion in Brazil has slowed the flow of exports and kept near-term global supplies tight, but Brazil’s exports are expected to reach a record high for the 2023/24 marketing year. Hot and dry weather will help extending Brazil’s production season. Once the rainy season starts, which usually happens in late November or early December, production season will stop until next year. EU 2023/24 sugar production is forecast to come in around 15.5 million tonnes, a 3% increase from 2022/23. Lower production in France is expected to be offset by an increase in eastern Europe. Unseasonable rains and hailstorms damaged 50,000 hectares of agricultural land in India’s second largest sugar producing state of Maharashtra, which could affect their cane output. Thailand’s production is also expected to be sharply lower after El Nino brought drought to that nation earlier this year.
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