ADMIS News
COTTON
December cotton held above a key technical support level this week and may avoid a further selloff until the more official US crop numbers arrive. It was impressive that December cotton managed to hold above Wednesday’s lows yesterday in the wake of another discouraging export sales report. US 2023/24 ending are expected to be their lowest in seven years, but world stocks, while lower than last year, are expected to be above where they were two years ago. China has been the largest buyer of US cotton so far for 2023/24. They are followed by Pakistan and Mexico. Rain could slow harvest in west Texas and parts of the Southeast, but dry conditions in the Delta and Coastal Bend regions should favor harvest there. El Nino poses a threat to Australian production in the coming year.
COCOA
After receiving some better than expected third-quarter grind numbers from Europe and Asia, the North American grind was a disappointment. The market opened lower on the news overnight, but it rallied back to higher on the day, and it looks like it has rejected that low. The possibility of a third global supply deficit in a row provides underlying support. West African production has been hurt by too much rain, and warm and dry conditions offer a chance for improvement. But, El Nino could bring drought to the region as well as Asia and bring too much rain to Central America, all of which could cause problems in the upcoming season. The latest United Nations forecast calls for El Nino to last at least through the first half of 2024.
COFFEE
Coffee prices have been able to defy a negative shift in global risk sentiment to extend their recovery move. Available supply appears to be getting tighter, with ICE exchange stocks falling and delays occurring at Brazilian ports. ICE coffee stocks fell 10,125 bags on Thursday to their lowest level since last November. With no coffee left to be graded, stocks are on-track for an eighth monthly decline in a row. Exporters in Brazil are reporting delays in coffee shipments due to high volumes of corn, soy, and sugar and tight availability of trucks and containers.
SUGAR
The strong Brazilian crop is expected offset lower production in India and Thailand, but shipping delays in Brazil have kept nearby supplies tight. Heavy rains have caused a slowdown in sugar loadings at a time when exporters are competing with soy, corn, and coffee for space. One exporter attributed the container shortage to sugar exports. India’s sugar export ban has been extended beyond the end of October, but a government official has left open the possibility that the ban could be lifted later in the marketing year. Monsoon rains have retreated from India, and rainfall totals for the season were 6% below average, according to the India Meteorological Department. This was an improvement from earlier in the season, but it was still the lowest since 2018.
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