ADMIS News
COTTON
Profit taking and concerns that the rally had gone too far off the export theme sparked a sharp selloff in May cotton on Tuesday. Fund traders had been aggressive buyers over the past month, going from a net short of 2,016 contracts on January 16 to a net long of 71,599 on February 13. This was their largest net long since May 2022. The aggressive buying pace left the market vulnerable to heavy selling. The relatively small export sales reported last week had traders concerned that the recent surprisingly strong pace of sales had peaked. The Cotton Association of India is estimated Indian 2023/24 cotton production at 29.41 million bales for the marketing year that began on October 1. This is down from 31.89 million bales the previous season.
COCOA
Cocoa traders have put aside concerns about demand destruction and are focusing again on the dire conditions in the world’s primary production region. The May contract traded to a new contract high overnight, as concerns about the upcoming mid-crop worsened with the ongoing dry conditions in West Africa. Soil moisture has fallen sharply, and there have been reports that small pods and leaves are drying up and falling to the ground. Key Ivory Coast growing locations of Doala and Yamoussukro had no rain last week versus five-year averages of 7.5-9 mm, and Western Soubre had 0.2 mm versus 8.7 mm on average. Ivory Coast has chances of rain next Tuesday-Saturday, with probabilities of 55% or higher in four out of five days. Daily highs are in the upper 90s to low 100s most days in the next two weeks.
COFFEE
Recent rainfall over Brazil’s major Arabica growing regions looks beneficial for the 2024/25 crop. Brazil’s Cepea said that if weather conditions remain favorable, the harvest may start in late April to early May, which would bring the crop to port earlier than normal. Brazil’s Cooxupe, the country’s number-one coffee exporter, said yields in the areas where it operates will likely be higher than initially expected. The current forecast for Minas Gerais calls for the rains to continue through Friday, take a pause for a week, and then resume the following Friday, March 1.
SUGAR
May sugar continues to hold above the 50-day moving average, but just barely, and this level may be a key bull/bear line today. Weather trends in Brazil have turned bearish, with recent rainfall in the Center-South cane growing regions being viewed as beneficial to the upcoming crop. There are even some who are calling for another year of record production in 2024/25. Archer Consulting said that Brazilian mills had hedged 72% of their 2024/25 sugar exports by the end of January versus 64% at that point a year ago. This suggests that there could be less hedge selling by mills this month and next month, which could provide underlying support to the market.
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.
