ADMIS News
COCOA
West Africa has a decent weather forecast over the next week, with periodic showers and thunderstorms. Some areas may see moderate to heavy rainfall at times, while others could likely benefit from more rain than what is forecast. There will also be periods of drying. The cocoa market is in a consolidation pattern as it awaits the start of the main crop. The lack of significant weather issues this summer points to a decent recovery in production this year. Higher prices have also incentivized fertilizer and pesticide usage as well as encourage expansion in plantings in the Americas. However, it can take 3-4 years for newly planted trees to become productive, and there could still be issues stemming from last year’s outbreak of swollen shoot disease.
COFFEE
Conab has lowered its forecast for 2024 Brazil’s coffee production to 54.79 million bags from 58.81 million forecast in May due to the dry weather and extreme heat the crop experienced during its development phase. This would put production down 0.5% from last year. Arabica production was lowered to 39.59 million bags from 42.11 million previously. This is forecast still up 1.7% from 2023 due to increased planted area, but yields were lowered despite this being an “on year” in their biennial cycle. Robusta production was forecast at 15.2 million bags, down from 16.71 million estimated in May and down 6% from a year ago. Brazil’s weather conditions are not expected improve much through next week, but there could be a gradual increase in the number and frequency of showers as humidity starts to build for the rainy season. Greater rainfall is possible in the last days of September or early October. Until then, most of the rain will remain too light to induce any flowering. Indonesia could see an increase in showers and thunderstorms next week, but more is needed. ICE arabica stocks are down to 837,656 bags, a decline of 20,818 from a week ago and their lowest since September 4. The amount pending review are down to 6,081 bags, which is the lowest in more than six months.
COTTON
December Cotton extended yesterday’s rally overnight to trade to its highest level since June 27. The market overcame a disappointing export sales report yesterday and benefited from gains in the equity markets. Recent declines in crop conditions in the Delta and in USDA production forecasts have allowed the market to build on its recovery off the August contract lows. Yesterday the market achieved a 0.382 retracement of the selloff from the February high to the August low, and it punched through that level overnight. The nearby Dollar Index fell to its lowest level since July this week, which could help improve US export prospects. However, China’s crop looks good, and they have scaled back their purchases of US cotton significantly. Yesterday’s export sales report showed US cotton sales for the week ending September 12 at 106,801 bales for the 2024/25 (current) marketing year and 10,560 for 2025/26 for a total of 117,361. This was up from 116,052 the previous week but down from 215,879 the week before that
SUGAR
March Sugar achieved the 0.618 retracement of the selloff from the November high to last week’s low yesterday and punched through that line overnight to trade to its highest level since February. The market is seeing a collapse in open interest as traders are apparently unwinding short positions. The market is has been supported by diminishing expectations for Brazil’s cane crop in the wake of a very dry conditions this year. One of the triggers in this week’s rally was data from sugar from CTC that showed Brazil’s Center-South cane crop yields were down 7.4% through the end of August. Brazil is not expected to see any significant improvement over the next week but there could be some increase in the number and frequency of showers as the rainy season starts to develop. World Weather Service thinks chances of rain should improve towards the end of the September or early October.
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