ADMIS News
COCOA
May cocoa sold off overnight after it failed to overtake Monday’s contract high on Tuesday. There has been no letup from West African supply issues, but traders are wondering how high the market can go. There is also the nagging concern about demand. Ivory Coast Agriculture Minister said Ivorian output could fall 25% this year but no more than that. They are currently expecting a 20% drop as they await the mid-crop. Ivory Coast port arrivals are running about 30% behind last season’s pace. The late stages of West Africa’s dry season have seen little rainfall and very high temperatures, and it may be optimistic to think that Ivory Coast mid-crop output will fare any better than the main crop did.
COFFEE
May coffee’s reversal yesterday is bullish and suggests a tentative low is in place. The market recently broke below consolidation on ideas improving rainfall in Brazil had eased concerns about the upcoming crop, but a traders cited a drier pattern emerging over the next several days. The forecasts show a greater than 50% chance of rain in 9 of the next 10 days, but many of the days only call for “occasional” rain or thunderstorms. Tight robusta supplies in Vietnam have been a supportive factor as well, but they may lose their impact as Brazil’s robusta harvest is expected to start next month.
COTTON
May cotton traded to new contract highs again overnight and reached the expanded, 5.00-cent limit. Spec fund buying has been aggressive, especially after the nearby contract broke out above at 15-month consolidation pattern this month. US supplies are tight, and there is a seasonal tendency for prices to rise this time of year. The February USDA supply/demand report released earlier this month showed US 2023/24 ending stocks at 2.8 million bales, down from 4.25 million a year ago and the lowest since 2016/17. World ending stocks were estimated at 83.70 million bales, up from 82.97 in 2022/23 and the highest since 2019/20. Weekly export sales have been on the low side for the past couple of reports, but traders may be thinking China will reemerge as strong buyers now that the Lunar New Year holidays are over. Wildfires in the Texas high plains and in Oklahoma are probably a bigger concern to the cattle market than cotton as they seem to be affecting mostly grasslands, but the situation bears watching.
SUGAR
The International Sugar Organization increased its forecast for the global sugar deficit for 2023/24 to 689,000 tonnes from its previous forecast of 335,000 tonnes in November. A Reuters poll recently had a median forecast for a 500,000-tonne surplus. ISO lowered global 2023/24 production to 179.7 million tonnes from 179.9 million previously and increased consumption to 180.4 million from 180.2 million. Brazilian production was increased to 44.52 million tonnes from 43.07 million previously, but Thailand’s production was cut to 8.24 million from 9.48 million. Rainfall over Brazil’s Center-South cane growing regions has been below normal for the past few months, and this is expected to have a negative impact on their upcoming 2024/25 cane crop. Brazil’s record production this year has helped offset steep declines in India and Thailand, but they will be hard-pressed to repeat last year’s performance.
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