ADMIS News
COTTON
The strong export pace in recent weeks has sparked a rally in March cotton to its highest levels since before harvest, when the market was focused on the drought-damaged US crop. There is talk that the 2023/24 crop is just about sold out and that selling has dried up. Sales could start to slow down ahead of the Lunar New Year holidays, which start tomorrow. China raised it cotton import forecast by 150,000 tonnes to 2 million tonnes. Last week’s export sales report showed net sales of 374,533 bales for the week ending January 25, which was the second highest since November. For the supply/demand report today, the average trade expectation for US 2023/24 ending stocks is 2.86 million bales, with a range of guesses from 2.65 to 3.00 million. This would be down from 2.90 million in the January update. A US court has nullified the government’s latest approvals of dicamba-based weedkillers. This is a concern to cotton and soybean growers who use varieties that are genetically engineered to resist them, and it could cause production problems going forward.
COFFEE
March coffee was slightly lower overnight but inside yesterday’s range. The daily increases in ICE exchange Arabica stocks took a pause on Wednesday, as they were unchanged at 288,745 bags. They are up 38,916 bags since the end of January, and there are 55,014 pending review. Colombian output continues to see improvement over last year. Global robusta supplies remain very tight, Vietnamese farmers are reluctant to sell, and the attacks on ships in the Red Sea have slowed the movement of coffee from Asia to Europe. The robusta shortage has shifted some demand to Arabica coffee. There have been reports that shipments of Ethiopian coffee have been interrupted by the attacks as well. The International Coffee Organization reported that world coffee exports rose 13.6% in December relative to the previous year.
COCOA
March cocoa gapped higher overnight to trade to another new all-time high. The market broke through a previous all-time high from July 1977 yesterday, with this latest leg in long the bull market being fed by recent hot and dry weather in West Africa. A reportedly severe Harmattan wind this season is adding to the production problems that have plagued the region since last summer when excessive moisture damaged the main crop harvest and induced swollen shoot disease in some trees. The Ivory Coast Coffee and Cocoa Council recently lowered its midcrop forecast to 400,000-450,000 tonnes from 550,000 last year. Ghana’s production is estimated to be down 200,000 tonnes for 2023/24, and there is talk that Ivory Coast has oversold its crop by 70,000-100,000 tonnes. Traders wonder when high prices will cut off demand and/or encourage more production.
SUGAR
The sugar market is conflicted by the record Brazilian crop and the shortfalls in India and Thailand this year. 2023/24 Brazilian production is at record levels. Brazil exported 3.202 million tonnes of sugar in January, up from 2.026 million a year ago. The season was extended by the unusually dry conditions at the end of 2023 and into this year, which has kept harvest and crushing activity running above year-ago levels through mid-January. However, this is a two-edged sword, as the dry conditions can also mean lower production in 2024/25. Rain in the forecast for South-Central Brazil starting Saturday and continuing for the next 12 days offer a chance for relief.
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