COCOA
The cocoa market has been under pressure recently on what has generally been favorable weather for key producers Ivory Coast and Ghana. Many growing areas in those countries and Nigeria and Cameroon received light to moderate rain over the weekend, which is viewed as beneficial for production, as long as there are also periods of sunshine. The main crop harvest begins this month, and growers are expecting strong production through December. Ivory Coast cocoa arrivals totaled 13,000 metric tons last week, which down from 50,000 for the same period a year ago and counter to recent trends. The pace of arrivals will be watched closely over the next few weeks to see how the harvest is advancing. The market also felt pressure last week from indications that the EU would delay the implementation of it anti-deforestation law that threatened to reduce imports into Europe. Friday’s Commitments of Traders Report showed managed money traders were net buyers of 3,028 contracts of cocoa for the week ending October 1, increasing their net long to 35,580.
COFFEE
December Coffee extended last week’s selloff overnight and trade to its lowest level since September 9, as the market continued to see pressure from the forecast for Brazil to finally see some relief from drought this week. World Weather Service says rain is expected to develop a little more significantly in Brazil coffee areas Wednesday through Friday. Sufficient amounts should occur to induce some flowering, although the daily precipitation is expected to be light. The region needs to see the rainy season emerge in full force to ease stress on trees and help the new crop develop. Southern India and portions of southern Indonesia will continue to experience a greater frequency of rain that will ease long term dryness. Brazil exported 4.05 million bags of green coffee (253,057 tons) in September, 36% more than last year. Vietnam exported 52,000 tons of coffee for the month, up 3% from last year. Year to date exports have reached 1.1 million tons, down 11.5% from the same period last year. ICE arabica stocks were up 8,702 bags on Friday at 804,576 after falling to their lowest levels since June 4 on Thursday. Friday’s Commitments of Traders Report showed managed money traders were net sellers of 1,136 contracts of coffee for the week ending October 1, reducing their net long to 59,789.
COTTON
December Cotton was higher overnight and could be headed to a test of the September 24 high. Sharply higher crude oil prices lend support to cotton on ideas this makes man-made fibers more expensive. The tentative settlement of the port workers strike on Friday eased concerns about export disruptions. Tropical storm Milton is forecast to hit Florida on Wednesday as a Category-3 hurricane. The current path is centered around Sarasota and does not appear to pose much of a threat to cotton growing areas. The storms does not look very wide and is fast moving, which could lighten the overall damage. Citrus areas could see damage from wind and excessive rain. Most cotton growing areas look dry this week, which should help the harvest advance. Last week’s reduction in crop conditions did little to support the market, which had already seen an advance in prices ahead of Hurricane Helene. Friday’s Commitments of Traders Report showed managed money traders were net buyers of 5,402 contracts of cotton for the week ending October 1, reducing their net short to 12,147. These traders have gone a long way towards correcting their oversold condition from early August, when they were net short a record 52,000 contracts. Poor export sales and a dollar rally would seem to limit upside, but the market may also be an acknowledging lower US production this year than previously anticipated.
SUGAR
March Sugar was near unchanged overnight as it continued its consolidation of the September rally. Brazil could see improved rain this week, but arrival of the long-awaited rainy season has yet to show. The extended drought this year has analysts expecting an early end to the 2024/25 harvest and a slow start for 2025/26, which could lead to tight supplies early next year. However, Brazil exported 3.95 million metric tons of sugar in September, up from 3.19 million a year ago (+23%). Crude oil was higher again overnight, which provides underlying support to sugar on ideas it makes ethanol production more attractive. Friday’s Commitments of Traders Report showed managed money traders were net buyers of 20,243 contracts of sugar for the week ending October 1, increasing their net long to 140,016. This is still well below the net long of 270,000 from August 2021 and the record net long of 286,000 from 2016, which suggests there is room for more fund buying.
Interested in more futures markets? Explore our Market Dashboards here.
Risk Warning: Investments in Equities, Contracts for Difference (CFDs) in any instrument, Futures, Options, Derivatives and Foreign Exchange can fluctuate in value. Investors should therefore be aware that they may not realise the initial amount invested and may incur additional liabilities. These investments may be subject to above average financial risk of loss. Investors should consider their financial circumstances, investment experience and if it is appropriate to invest. If necessary, seek independent financial advice.
ADM Investor Services International Limited, registered in England No. 2547805, is authorised and regulated by the Financial Conduct Authority [FRN 148474] and is a member of the London Stock Exchange. Registered office: 3rd Floor, The Minster Building, 21 Mincing Lane, London EC3R 7AG.
A subsidiary of Archer Daniels Midland Company.
© 2024 ADM Investor Services International Limited.
Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. The information and comments contained herein is provided by ADMIS and in no way should be construed to be information provided by ADM. The author of this report did not have a financial interest in any of the contracts discussed in this report at the time the report was prepared. The information provided is designed to assist in your analysis and evaluation of the futures and options markets. However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to ADMIS. Copyright ADM Investor Services, Inc.