COFFEE
May coffee experienced a downside breakout of the recent consolidation yesterday but the market found support at 168.60. Talk of the bigger than expected Brazil crop helped to pressure. A shift to more normal weather over Brazil’s major Arabica growing areas should improve the prospects for their 2023/24 crop, and that pressured coffee prices this week. The Arabica harvest is expected to start in a few weeks with fresh supply reaching Brazil’s ports by early May. First quarter Central American exports have come in well above last year’s totals which has also weighed on coffee prices, as that supply will offset the pullback in Brazilian and Colombian coffee exports.
COCOA
While cocoa is finding some relief from near-term demand concerns, its sizable gains for the month and quarter have left the market vulnerable to a near-term pullback. After a bearish supply development in West Africa, cocoa may extend this pullback. May cocoa was unable to shake off early pressure as it finished Wednesday’s trading session with a moderate loss. Ivory Coast’s Coffee and Cocoa Board announced that they will extend the period for exporters to purchase cocoa beans into the mid-crop production window that will start on Saturday. While global risk sentiment continued to improve, cocoa found carryover pressure from mild pullbacks in the Eurocurrency and the British Pound. Going into the final 3 sessions of March, cocoa prices were also weakened by profit-taking.
COTTON
May cotton remains in a short-term uptrend and traded to its highest level since March 9 yesterday. The market traded right to the 50-day moving average but closed below it, and that level, 83.42 could be a key resistance level. Equity markets rallied as worries about stress in the banking sector eased, and this lent support to cotton. However, this was partially offset by a stronger dollar and weaker crude oil prices. Traders will be looking to today’s weekly US export sales report for direction. Last week’s report showed net sales of 331,532 bales for the week ending March 16, which was the highest since February 16. For the USDA prospective plantings report on Friday, the average trade expectation for US cotton plant area is 11.0 million acres, with a range of expectations from 10.5 to 12.7 million.
SUGAR
The upside break-out overnight leaves 21.70 as next upside target. The sugar market remains in a steady uptrend and posted new contract highs this week, last week and March 9. The upside momentum seems to be waning a bit with an inside trading day yesterday. There is some growing concern that the Brazilian crop production will pick up rapidly over the near term, but this has been offset by smaller crops in India, Thailand and the European Union so far. Technical indicators are mostly neutral and the open interest has remained mostly steady on the recent rally. A pullback in crude oil and RBOB gasoline after making new highs for the move put carryover pressure on the sugar market yesterday. A larger than normal amount of Brazil’s Center-South mills have started their crushing operations this year, which also pressured sugar prices as Brazil should have ample near-term supply by late next month.
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