ADMIS News
COTTON
The cotton trade could continue to be tentative ahead of Friday’s USDA report. The trade is expecting a modest decline in the US cotton production and ending stocks from the report, given the current poor crop conditions and the hot weather over the past month and a half. For the report, the average trade expectation for US 2023/24 cotton production is 15.78 million bales with a range of expectations from 15.25 to 16.30 million. This would be down from 16.50 million in the July report. Traders may be interested to see if this morning’s weekly export sales report shows improvement over last week. Last week’s report showed net cancellations of 9,912 bales for 2022/23 and net sales of 33,936 for 2023/24 for an overall net sale of 24,024, the lowest since last December. With only limited amount of rain expected to reach west Texas and the Coast Bend region over the next five days, and the 6-10- and 8-14-day forecast showing a 70-90% chance of much above normal temperatures and a 40% chance of below normal precipitation, the window is closing for an improvement in US cotton conditions.
COCOA
December cocoa pressed lower overnight, as the market continued to see long liquidation. Near-term demand concerns and a bearish take on recent weather reports from west Africa have sparked heavy selling. The negative shift in global risk sentiment since the start of August has weakened the demand outlook for chocolate. The decline in consumer inflation over the past year has benefited demand for discretionary items, and this morning’s US CPI results will need to avoid any notable increase to maintain that posture. Cocoa’s long-term supply outlook remains tight, with the market on its second annual global supply deficit in a row and El Nino threatening a third.
COFFEE
Coffee prices continue to hold above their late-July lows, as low production in Colombia counters strong Brazilian output. Brazil’s major Arabica-growing regions have mostly dry weather in the forecast through late next week, which should minimize harvest delays. Recent declines in the Brazilian currency encourage producers to sell coffee for export. Cecafe said that Brazil’s July Arabica exports came in at 2.19 million bags, which was 6.5% above a year ago. Colombia’s July coffee production came in at 947,000 bags, 0.5% above year-ago levels. This was the second month in a row that production was above 2022 levels. However, their 12-month production total through July was 10.779 million bags, only slightly higher than May’s 12-month total of 10.771 million, indicating that output has not improved much since the end of La Nina earlier this year.
SUGAR
Sugar regained some lost ground on Wednesday, benefiting from strength in the energy markets, but the Brazilian supply outlook continues to weigh on prices. Large rallies in crude oil and gasoline provided support to sugar on ideas it will strengthen ethanol demand in Brazil and India. Unica will release its bimonthly report later today, which will show Brazil’s Center-South sugar production and cane crushing activity for the second half of July. Through mid-July, Center-South sugar production was running 21.9% ahead of last season, and cane crushing was 10.1% ahead. India’s 2023/24 sugar production is expected to come in below 2022/23 levels, which could keep them out of the global export market until the second quarter of 2024.
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