ADMIS News
COFFEE
Like the cotton market, the coffee market has negative charts this week with lower highs and lower lows setting up a challenge of key support today at 165.00. However, the market should draft some support from a reduction in the Vietnam crop from the USDA Foreign Agricultural Service. Their 2023/2024 season has a projected production of 27.5 million bags and exports are expected to be reduced by 2.5 million bags. Stronger export demand for Vietnam coffee could be better than expected given delays in Brazil exports especially with the Foreign Ag Service cutting Indonesian coffee exports from 5.2 million bags to 5.0 million bags earlier this week. In a very minimal negative issue Uganda October coffee exports increased by 3% which as indicated is a very minuscule supportive development.
SUGAR
With the charts turning bearish earlier this week, oil prices languishing, a 12 year high in sugar prices earlier this month and reports that the Brazilian center South region will see its production jump by 28.4% on a year over year basis, the bear camp has the edge. Fortunately for the bull camp, the net spec and fund long position in sugar has moderated recently as the net spec and fund long is near 5-month highs. On the other hand, London traders supported white sugar prices yesterday off reports of stronger Q1 demand and some Brazil supply concerns.
COCOA
While the cocoa market is showing early positive action the market remains within the prior session’s range but has respected the pattern of higher lows from earlier in the week. The market should draft support from strength in the euro and British Pound which should increase the purchasing power of European importers/grinders. Brazilian cocoa production last year was roughly half of the production level seen in the 90’s. In the end, the Ivory Coast producers continue to tout this crop as the worst season ever with warehouses in the Ivory Coast cooperatives almost empty and fears of further production losses from excess rain remaining a fixture in the market especially following claims of pods rotting.
COTTON
We see the cotton market facing further liquidation pressure with the selloff from this week’s highs balancing the oversold condition and leaving the 80.00 level as a very important pivot point/failure level on the charts. As indicated earlier in the week Brazilian soybean acres are being diverted to cotton which should boost talk of burdensome global supplies and that in turn suggests a lower weekly close. The Brazilian consultancy firm Agroconsult is forecasting their nation’s 2023/24 cotton production at 3.74 million tonnes, up 16.4% from 2022/23. Some farmers anticipate planting cotton in damaged soybean areas. The recent USDA supply/demand report had Brazil’s 2023/24 production at 14.56 million bales. In October, the Brazilian Cotton Growers Association (Abrapa) was forecasting a 3.23 million-tonne crop, which is closer to the current USDA estimate.
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