ADMIS News
COCOA
Cocoa prices have been able to lift further clear of last week’s lows, due in part to the strength of key outside markets that are helping to soothe near-term demand concerns. If global risk sentiment continues to improve, cocoa should be able to extend this current recovery move. A shift towards wetter weather over West African growing areas pressured cocoa prices as that can benefit the region’s upcoming mid-crop production. Recent rainfall may also lead to harvesting, drying and transportations delays, and could increase the spread of mold onto newly-harvested beans.
COFFEE
While coffee prices have had a bullish supply outlook for Brazil since La Nina extended drier than normal conditions into this year, it has been recent weather developments that have fueled this current recovery move. The market should have a good idea of their severity early in today’s action, and that could result in volatile price action. Cold weather over Brazilian Arabica growing areas forecast for early today through early Friday continues to provide underlying support for the coffee market. The coldest temperatures for the key south Minas Gerais growing region today are expected to occur during the first hours of coffee’s trading session, so there will be a fairly quick impact on prices if they reach low enough levels to do damage to coffee trees.
COTTON
December cotton traded to new contract highs for the second day in a row yesterday, but closed moderately lower. The dollar was sharply lower, which helps export demand for US cotton. The stock market was higher, which is also supportive. However, in crude oil was lower, which is negative. Traders expressed concern about Chinese demand, especially after Monday’s rally in US prices made imports of US cotton less attractive in China. However, the sharp break in the dollar helps mitigate that effect.
SUGAR
Sugar prices have risen nearly 8% in value over the past 4 sessions as they continue to receive bullish supply developments from Brazil. Even if key outside markets lose their recent strength, sugar should remain well clear of last week’s lows. There are reports that several of Brazil’s Center-South mills are cancelling contracts to export sugar in order to divert their production over to ethanol.
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