ADMIS News
SUGAR
March sugar bounced off the 50-day moving average yesterday and tried to build on those gains overnight. The market could be approaching an inflection point, as it balances record Brazilian production with lower output in Thailand, India, and possibly Australia. Yesterday, Australia-based sugar and biofuels analytical firm Green Pool said that it expects the global sugar deficit to widen to 788,000 tonnes in 2024/25. The 2023/24 deficit was forecast at 427,000 tonnes versus an 8.4 million-tonne deficit in 2022/23. This contrasts with a report from StoneX earlier in the week that projected a 2023/24 global surplus of 3.4 million tonnes, which was up from their previous estimate of 730,000.
COFFEE
March coffee bounced off the 50-day moving average yesterday, which lent support overnight, but the supply news has taken a negative turn this week, and we would not be surprised to see the market retest yesterday’s lows at some point this week. ICE exchange Arabica coffee stocks have continued their march higher, increasing another 7,290 bags on Tuesday to 288,745. They are up 38,916 bags since the end of January and are the highest they have been in 2 1/4 months. The increase in exchange stocks could be an indication of subdued demand from retailers. Last week, Starbucks Corp lowered its 2024 sales outlook. On the other hand, robusta stocks are at a record low, and a resumption in the London robusta futures could lend support to the NY Arabica contract. Safras and Mercado this week raised its 2022/23 Brazil coffee crop estimate to 61.1 million bags from a previous estimate of 58.9 million. Colombia produced 959,000 bags of washed Arabica coffee in January, up 10.5% from January 2023. Exports totaled 935,000 bags, up 12.4% from a year earlier. Colombia produced 11.3 million bags in 2023, up 2% from 2022.
COCOA
March cocoa extended its gains overnight, as it continued its march towards all-time highs. Ivory Coast’s Cocoa and Coffee Council is forecasting mid-crop production at 400,000-450,000 tonnes, down from 550,000 in 2023. A Reuters poll of traders and analysts projected a 375,000-tonne global deficit for the 2023/24 marketing year, which was more than double the projection from a previous poll last August. The poll also put Ivory Coast production at 1.8 million tonnes in 2023/24 and 2.0 million in 2024/25 versus an ICCO’s estimate for 2022/23 at 2.18 million tonnes. One factor that traders mentioned was the need for farmers to gain better access to fertilizers and pesticides. Ghana cocoa arrivals since the 2023/24 marketing year started on September 1 reached 341,000 tonnes as of January 31, down 35% from the same period a year ago, according to the Ghanian marketing board COCOBOD. Their production is estimated to have dropped by 200,000 tonnes from 2022/23
COTTON
March cotton was mixed overnight after trading to its highest level since October 16 yesterday. The market has garnered support from an improvement in the weekly exports data over the past few weeks, to the point where some traders think the 2023/24 crop could be nearly sold out. The sharp recovery in the Chinese stock markets over the past two days also lends support on ideas that a strengthening economy could keep them as active buyers. Traders will be looking to tomorrow’s export sales report for verification of the strong export pace, but sales could start to slow down ahead of the Lunar New Year holidays, which start this week. 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. Shipments totaled 396,711 in last week’s report, which was the highest since last April. The strong shipments pace has eased concerns about the potential for cancellations due to competition from South America and Australia. After the export sales report early tomorrow morning, the trade will be confronted with the monthly USDA supply/demand report at 11:00 AM Central time.
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