ADMIS News
COTTON
December Cotton gave back some of yesterday’s rally off the USDA supply/demand report overnight. The report caught the market by surprise, with US production and ending stocks coming in much lower than expectations due to a sharp revision lower in planted area. The dollar index falling to its lowest level since July 28 is supportive to US export prospects, and US equity markets extending their rallies suggests stronger demand, but the decline in crude oil prices makes man-made fibers a bit more competitive.
COFFEE
December Coffee was slightly higher overnight but inside yesterday’s range. News of frost hitting some isolated areas of Brazil this week may have been one reason for the rally, but the decline in ICE exchange stocks was also noted. ICE certified stocks fell 83 bags yesterday to 737,526, their lowest since May 14, 2024. Stocks have declined in 19 out of the last 20 sessions. Some isolated areas in Minas Gerais, Brazil reported frost on Monday that could have damaged buds for the next crop, but the extent of the damage will only become clear after the flowering period. Initial assessments said the frost only hit the canopy of the trees and was less widespread and severe than the event in 2021 that was the worst to hit Brazil in more than 25 years. They added that the frost likely affected buds that were already in advanced development and that could have bloomed in September or October with the arrival of rains. World Weather Service expects mild to warm temperatures to continue through the next 7-10 days, with no risk of crop threatening cold. The Brazilian growers group Cecafe said that US coffee buyers have started asking to postpone imports of Brazilian coffee following the imposition of the 50% tariff on Brazilian goods. Cecafe’s president said the US coffee industry is in a holding pattern and that they have enough inventory for 30 to 60 days.
COCOA
December Cocoa was lower overnight but was inside the upper end of Monday’s breakout range for the second day in a row. Reuters reported overnight that Ivory Coast’s Coffee and Cocoa Council (CCC) cut its export contract sales for the main crop (October-March) to 1.2 million metric tons from 1.3 million previously. Sources said the revision followed poor weather conditions ahead of the 2025/26 season. They quoted an anonymous CCC official as saying that the adjustment will allow them to avoid any defaults. This move was foreshadowed last week by reports from pod counters and exporters that they revised downward cocoa production figures last week because of disappointing counts. The CCC has already reached 950,000 tons of cocoa sold for the 2025/26 season and has only 250,000 tons left to sell by the end of September. Some Ivory Coast farmers interviewed this week repeated their concerns about a cold spell, but others said the main crop was developing well. The overnight maps showed Ghana received some light rainfall over the past 24 hours, while Ivory Coast was mostly dry. World Weather Service says conditions are likely to be dry through the next week, but they expect seasonal rains to resume later this month and in early September. None of this is unusual for this time of year, and crops should remain favorably rated as long as seasonal rains resume.
SUGAR
October Sugar was in the upper end of yesterday’s breakout range overnight. The market started out strong yesterday with a gap open above the 50-day moving average, and it eventually traded to its highest level since June 10. Some of this action is being credited to short covering, but it is important to note that open interest has been steadily climbing since the market put it its low in July, which suggests that buyers became interested at the July lows. The Brazilian real is the highest it has been since last September, which lowers the incentive for Brazilian crushers to sell sugar for export. There were also reports of a line-up of vessels in Brazil headed for China, which adds to ideas of underlying demand. We expect the UNICA report covering Brazilian sugar production for the second half of July to be released tomorrow or Friday. The last report showed first-half July production up 15% from a year ago and cumulative production down 9.2% The dry conditions in Brazil were supportive to cane harvest and production.
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