ADMIS News
COTTON
A three-day selloff helped correct an extremely overbought condition in May cotton, and the market appears to be consolidating its move to contract highs from late February. The trade is looking at tight US supply after a couple of years of poor crops, but global supply is not nearly as tight. For the monthly USDA supply/demand forecast on Friday, a Bloomberg survey has an average trade expectation for US 2023/24 ending stocks at 2.72 million bales, with a range of expectations from 2.55 to 2.9 million. This would be down from 2.8 million in the February report and down from 4.25 million in 2022/23. World ending stocks are expected to come in around 83.31 million bales (range 82.34-84.00), down from 83.7 million in February but up from 82.97 million in 2022/23. Once the report is out of the way, traders will likely start to focus on 2024/25 plantings, with the Prospective Plantings report due out on March 28.
COCOA
Concern over demand continues to smolder with cocoa prices close to record highs, and that could set the stage for a further pullback. However, the global supply remains tight and is expected to stay that way, so setbacks may be limited. Early forecasts for the 2024/25 season are calling for a fourth global production deficit in a row following a record deficit in 2023/24, but that will depend on the weather. Reports of rain reaching key growing areas in Ivory Coast this week suggest the West African dry season is coming to an end. The latest leg of the cocoa rally has been driven by reports of a worse than normal dry season this year, which has lowered expectations for the mid-crop.
COFFEE
Coffee’s March recovery move was derailed by near-term demand concerns, and the market continues to have trouble sustaining upside momentum. A negative shift in global risk sentiment following lukewarm US economic data and a sharp selloff in US equities was a source of pressure yesterday. ICE exchange coffee stocks rose by 10,000 bags to reach a new high for the year. The are more than 160,000 bags waiting to be graded. The buildup in stocks since the start of the year may reflect lukewarm out-of-home demand. Colombia’s coffee production totaled 961,000 bags in February, down 6% from a year earlier. Their 12-month production total through February was 11.374 million bags, the first monthly decline since August.
SUGAR
May sugar found support yesterday and overnight after receiving some bullish supply news. At the Dubai Sugar Conference, the CEO of BP Bunge Bioenergia forecast Brazil’s 2024/25 Center-South sugar production at 40.8 million tonnes, which would be down 4.4% from last year. He also said that 2024/25 will see a global production deficit of 1.6 million tonnes. Other analysts have already dialed back their expectations for Brazil’s upcoming cane crush and sugar production due to dry conditions. Sugar cane planting in key Indian sugar-producing states of Maharashtra and southern Karnataka is expected to fall in 2024/25, according to the President of the Indian Sugar and Bioenergy Manufacturers Association.
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