ADMIS News
COCOA
Cocoa continues to receive positive news from the supply side of the market, but that has provided little if any support to prices that have fallen nearly 200 points over the past week. Unless or until the market can receive bullish news from the demand front, cocoa is likely to slide further to the downside. Global risk sentiment continued to deteriorate throughout the day, which weighed heavily on the cocoa market as that has further eroded near-term demand prospects. Euro zone chocolate purchases are likely to be depressed by the potential for an embargo of Russian oil imports, while Asian demand remains uncertain while China continues to see COVID lockdowns and restrictions.
COFFEE
Coffee prices look to have further downside to go before finding a near-term floor. July coffee experienced a downside break-out yesterday. The near-term demand outlook has already been weakened by Chinese COVID lockdowns and Russia’s invasion of Ukraine, so the deterioration of global risk sentiment has put even more pressure on coffee prices early this week. The Brazilian currency has lost more than 10% in value over the past 2 1/2 weeks, and that has been a source of carryover pressure on the coffee market as it may encourage Brazil’s farmers to market their remaining near-term supply.
COTTON
July cotton closed moderately lower yesterday following Friday’s sharply lower close. The market was up earlier in the day on bargain hunting, but gave up all of its gains and then some, inching below Friday’s low and closing weak. The dollar was near unchanged, but the stock market had another sharply lower day, which is negative to cotton because it does not bode well for demand. The weather situation is mixed. Short term prospects for west Texas have improved.
SUGAR
Unless there is significant improvement in key outside markets and global risk sentiment, sugar may be setting up additional long liquidation selling. The last COT update showed managed money traders still held a net long position of 181,000 contracts. Crude oil and RBOB gasoline posted heavy losses that put considerable carryover pressure on the sugar market, as that is likely to dampen near-term ethanol demand. In addition, a new 7-week low in the Brazilian currency also weighed on sugar prices.
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