ADMIS News
COCOA
May cocoa extended Friday’s gains overnight to trade to new contract highs. Extreme volatility often precedes a long-term shift in trend, but the market still has a very bullish supply outlook. It is looking at a significant global production deficit for the 2023/24 marketing year, and early signs point to another one in 2024/25. West African mid-crop production has been dealt a blow by the severity of the Harmattan wind. However, Ivory Coast growing areas could see some rain in the next couple of weeks, which may ease some of those concerns. The International Cocoa Organization’s market report for January showed that as of February 4, estimated that marketing year arrivals at Ivorian ports were down 34% from 2022/23 to 1.051 million tonnes and that in Ghana, graded and sealed purchases were down 35% to 351,000 tonnes. It pointed out that grindings data published by the regional associations for the fourth quarter of 2023 did not show significant changes from the previous two years. The report mentioned structural issues that will keep cocoa supplies tight, such as aged trees, remunerative farm gate prices, and climatic challenges. They also expressed concern that the decline in supply could steepen as enforcement of the EU regulations on deforestation gets closer.
COFFEE
May coffee broke below its recent consolidation on Friday and extended those losses overnight to trade to its lowest level since January 19. Recent rainfall in Brazil has eased concerns about the upcoming crop. Robusta futures have also broken below recent consolidation after reaching 29-year highs last month, and this has pulled support from NY Arabica prices. The weather forecast for Minas Gerais, Brazil calls for mostly dry conditions through Wednesday, but the following 12 days have a greater than 50% probability of rain each day, with only two of those days below 60%. Colombia’s annualized production pace has increased for five months in a row, and it reached a 15-month high in January.
COTTON
May cotton is consolidating its rally from the November low to the contract high from earlier this month. US exports have slowed from the surprisingly strong pace earlier this year, but supplies are reportedly tight after the poor crop last season. Friday’s export sales report showed US cotton sales for the week ending February 15 at 130,468 bales for the 2023/24 (current) marketing year and 58,108 for 2024/25 for a total of 188,576. This was up from 168,209 the previous week but was the second lowest since December 28. Cumulative sales for 2023/24 have reached 90% of the USDA forecast for the marketing year versus a five-year average of 89% for this point in the season. Soil moisture improvements in US growing regions could get the 2024 crop off to a strong start, and the market has done a good job bidding for acreage this year.
SUGAR
Recent rainfall in Center-South Brazil has improved the outlook for the upcoming cane crop, which officially begins on April 1. May sugar finished last week with its first close below the 50-day moving average since January 22. The market bounced off retracement support around 21.71 overnight. It has become short-term oversold, but the fundamentals seem to favor the bear camp. Word is that traders will be watching the expiry of the March contract this week, to see how much appetite there is to receive sugar.
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