ADMIS News
COFFEE
Coffee prices continue to have problems sustaining recovery moves and are on the verge of falling to their lowest level since January. The market could benefit from improved demand prospects, but it is having difficulty overcoming bearish Brazilian supply news. A shift towards wetter and cooler weather this week in Brazil’s major Arabica growing regions has weighed on prices this week, as it improves the prospects for the 2024/25 season. This is an “on-year” for Brazil’s Arabica trees, which normally results in a production increase from the previous season. If Brazil can avoid problems with flowering this month, this could help offset production concerns in Colombia and Central America.
COCOA
December cocoa fell through the late September lows overnight, which could set the market up for further declines today. El Nino is expected to cause production issues across much of the world’s major cocoa growing areas this season, and that provides underlying support to the market. However, demand is a concern given the high prices and general uncertainty regarding the economy. European grind data is due out October 12 and North American on October 19. A Reuters survey of industry participants estimated that Ivory Coast port arrivals during the fourth quarter would come in 28.5% below year-ago levels, due to late and heavy rainfall and not enough sunny periods. Ironically, El Nino threatens abnormally dry conditions, which could also hinder production, but that does not appear to have developed yet in west Africa.
SUGAR
Sugar prices broke a three-session losing streak yesterday after trading to its lowest level in over a month, despite significant weakness in key outside markets. The Brazilian real fell its lowest level in six months but bounced off that level to close near unchanged, which may have lent some mild support to sugar. Crude oil and gasoline extended their selloffs overnight, which weakens the demand outlook for ethanol and encourages mills to focus their attention on sugar production.
COTTON
The US cotton crop is in poor condition, and traders are expecting the USDA to lower its production forecast in upcoming reports, but exports are lagging, and Brazilian exports are strong. The steep drop in energy prices makes man-made fibers more competitive with cotton, and the dollar sitting at 11-month highs makes US exports more expensive. The market would look favorably on a strong US export sales report today.
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