ADMIS News
COCOA
Cocoa continues to have concern with near-term demand prospects that will weigh on prices. July cocoa fell to a new 6 1/2 month low Friday. For the week, July cocoa finished with a loss of 40 points (down 1.6%) which was a fifth negative weekly result over the past 6 weeks. Cocoa’s near-term demand outlook has been pressured by the global COVID pandemic for over two years now, with recent Chinese lockdowns weighing especially hard on Asian demand prospects. While Russia’s invasion of Ukraine is located away from major western European nations, it has had a negative impact on travel within the EU which has traditionally been a major source of European chocolate purchases.
COFFEE
With the coffee market unable to sustain an early higher high for the move last week, the market looks to remain in a slow downwardly sloped consolidation pattern. While reports of improving demand have not been broadly accepted or strong enough to be a market changing factor, coffee continues to find support from bullish supply-side developments. While some areas of Brazil’s Arabica-growing regions saw damage to leaves, last week’s cold temperatures appear to have avoided significant damage to coffee trees. Even so, Brazil’s upcoming 2022/23 Arabica production is expected to come in at the lower end of recent “on-year” crop totals. The current La Nina weather event is forecast to last until late this year, which is likely to extend drier than normal conditions over that timeframe.
COTTON
July cotton closed lower on Friday after trading in a wide range that was inside Thursday’s wide range but the market slipped down to the lowest level since April 28th this morning before a bounce. December cotton closed sharply lower and down for the 4th session in a row and the selling pushed the market down to the lowest level since May 12th.
SUGAR
While sugar became significantly overbought into last Tuesday’s high, the 60-point setback should have balanced the market. While global slowing fears have fostered concern over slower sugar demand, fears of losses in Brazilian production should underpin prices going forward. For the week, July sugar finished with a gain of 78 ticks (up 4.1%) which was a third positive weekly result in a row. It was clear that improved overall market psychology helped sugar finish the week near the 2-month high close. While the sugar market has found support from soaring energy prices and a stronger Brazilian currency, recent pressure from production increases in Thailand and India have weighed on prices.
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