Explore Special Offers & White Papers from AFS

Cotton Needs Better Demand

COTTON COMMENTARY

The cotton market could have a difficult time mounting any significant rally until there is a sharp improvement in the global demand outlook. Low US production this year is being offset by a strong crop in Brazil, and it appears China is ready to lift its ban on Australian imports. The hot and dry conditions in Brazil this season have reportedly encouraged growers to switch some of their plantings from corn and soybeans to cotton. Yesterday’s weekly US export sales report was not bad, but it was not particularly exiting either. The report showed cotton sales for the week ending November 23 at 217,622 bales for the 2023/24 marketing year and 15,400 for 2024/25 for a total of 233,062.

Cotton fields

COCOA COMMENTARY

After extending this week’s rally yesterday, March cocoa turned lower overnight, perhaps on some end of week profit taking and less bullish supply/demand data. A sharp selloff in the Euro and British Pound may have also weighed on prices on ideas the weaker currency will make it more expensive for European grinders to buy cocoa. In its 4th-quarter update, the International Cocoa Organization (ICCO) narrowed its projected global production deficit for 2022/23 to 99,000 tonnes from 117,000 in previously.

COFFEE COMMENTARY

Coffee broke out of its recent consolidation zone yesterday in the wake of a sharp decline in ICE exchange stocks, and it extended its rally somewhat overnight. ICE exchange coffee stocks fell another 35,734 bags on Thursday after declining by 33,764 bags on Wednesday. They finished November at 224,006 bags, which is the lowest since February 1999. ICE’s new rules limiting the ability to resubmit older coffee to the exchange take effect today, and stocks have been declining steadily with the approach of the deadline, culminating in the massive declines of the past two days. Now that the day has arrived, the stock levels may start to stabilize.

SUGAR COMMENTARY

March sugar broke below a long-term consolidation yesterday and extended its losses overnight to trade to its lowest level since October 4. The Brazilian government agency CONAB said that their nation will have record cane crush and record sugar production this season. The market has been fully aware of Brazil’s strong production this year, with the bi-weekly UNICA reports showing increases of 23% over year ago levels for the 2023/24 marketing year, but shipping delays due to port congestion have supported that market since early October.

 

Interested in more futures markets?  Explore our Market Dashboards here.

Futures and options trading involve significant risk of loss and may not be suitable for everyone.  Therefore, carefully consider whether such trading is suitable for you in light of your financial condition.  The information and comments contained herein is provided by ADMIS and in no way should be construed to be information provided by ADM.  The author of this report did not have a financial interest in any of the contracts discussed in this report at the time the report was prepared.  The information provided is designed to assist in your analysis and evaluation of the futures and options markets.  However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to ADMIS. Copyright ADM Investor Services, Inc.

Latest News & Market Commentary

Explore Special Offers & White Papers from Archer Financial Services

Get Started

Contact Us Today