ADMIS News
COTTON
December Cotton was higher overnight on follow-through from yesterday’s bounce after off an 18 ½-month low. The news has been consistently bearish on the production front, but traders may have thought the market pushed too low, too fast for this early in the growing season. US soil moisture conditions are good, and initial crop conditions ratings have been high. The 6-10-day forecast has above normal chances of precipitation accompanied by moderately above normal temperatures in west Texas, but the 8-10 day has near normal rainfall chances and more above normal temperatures. This is not exactly sounding any alarms. US cotton export sales have been consistently strong recently, but shipments have not. Last week’s export sales report showed net sales of 300,734 bales for the week ending May 23. Sales have been above 250,000 for the past four weeks and above 225,000 in six out of the past seven. Shipments totaled 172,195, which was the lowest since January.
Crop conditions look good, but it is very early in the season.
SUGAR
July Sugar is attempting to break out of its three-week consolidation pattern after receiving some bullish news on the Brazilian production front last week. The Unica report on Friday showed Brazil’s Center-South sugar production for the first half of May at 2.567 million tonnes, up 0.97% from the same period last year. This was lower than a pre-report survey calling for a 6.3% increase. Cumulative production as of May 15 was 26% ahead of last year versus 66% on April 30. The market has rallied off the news and is back near the upper end of a three-week consolidation pattern. Warm and dry conditions are expected to prevail in Center-South Brazil through June 15, which will be conducive to harvest, but the dry conditions do raise concerns about yields for later in the year. The workers’ union at Wilmar Sugar, Australia’s largest sugar producer, has agreed to halt strike action leading up to the vote on a new contract on June 10 and 11. This came after the company threatened to bar any employees that participated. Union leaders are opposed to the new contract. Work stoppages have delayed the start of the new processing season by anywhere from two to nine days. Australia is the world’s fourth largest sugar exporter.
COCOA
July Cocoa gapped lower on Tuesday and fell back to the 50-day moving average, but it held that level, as it has for the past four sessions, and this could be an important support area today. Traders remain attuned to the weather in West Africa, upon which the 2023/24 mid-crop depends. Reports were that rains were below average last week and that more rains are needed, along with sunny spells. Last Friday’s ICCO quarterly update called for a global supply deficit of 439,000 tonnes in 2023/24 versus a previous forecast calling for a deficit of 374,000 tonnes. ICCO raised its production estimate by 11,000 tonnes, but it increased the grindings total by 76,000. The strong grindings were a bit of a surprise because many had expected the record high prices to pull demand lower.
COFFEE
July Coffee was lower overnight but inside yesterday’s range. The market has held up well to the USDA’s latest forecast calling for a 5.4% increase in Brazilian production in 2024/25. The slow export pace out of Vietnam is a supportive factor, particularly for London robusta futures, which are hovering around contract highs. Their poor robusta crop last year has been the key driver of the rallies in both London and NY futures over the past year. The nearby Brazilian real fell to the lowest level since 2023 this week, which puts pressure on growers to market their supply. The buildup of ICE arabica stocks acts as a counter to the tight robusta supply, and Brazil appears to be heading for a third production increase in a row.
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