COTTON
December cotton gapped higher overnight as anxiety in the wake of the attack on Israel supported several commodity markets. The market fell to the 50-day moving average on Thursday and held that line on Friday, which it technically supportive. The trade is looking for declines in US 2023/24 cotton production, exports, and ending stocks in Thursday’s monthly USDA supply/demand report. Australia experienced its driest September on record, and traders will be keeping an eye on their cotton production as El Nino sets in.
SUGAR
The sugar market was higher overnight, as it drew support from strength in other commodities, particularly the energy markets, which were higher in the wake of the attack on Israel over the weekend. With south Asia supply issues continuing to provide support, sugar could see a recovery move back to contract highs. The Brazilian real rallied from a new 6-month low to grind out a modest gain on Friday, and this lent support to sugar on ideas reduces pressure on cane crushers to process sugar for export. Concern that this season’s Thailand production and exports will see a sharp decline in 2023/24 also supported sugar last week. At this point it appears India could face a supply deficit this season, which would keep them out of the global export market.
COFFEE
Coffee prices were higher overnight and seemed to draw support from a generally positive mood in the commodities in the wake of the attacks on Israel over the weekend. This a reversal higher on Friday after trading to a new 28-month low, which was a positive technical development. Indications that this season’s Central American production may come in lower than last season provided fundamental support to the market going into the weekend. ICE exchange coffee stocks were unchanged on Friday, but they remain close to their lowest levels since November. There is rainfall in the forecast for Brazil’s main Arabica growing region over the next ten days, which should benefit flowering and development for the 2024/25 crop. The Brazilian real fell to its lowest level since March on Friday but then reversed and closed higher, which is supportive for the currency and reduces pressure on Brazilian growers to sell their crops.
COCOA
December cocoa experienced a positive technical reversal on Friday that suggests a near term low could be in place. It was not among the commodity markets that were higher overnight in the wake of the attack on Israel, perhaps because it is not viewed as a necessity the way energy, grains, or sugar are. However, cocoa does face a potential global supply deficit for a third straight season, and if demand prospects are not diminished by the weekend’s events, the market may be able to build off last week’s low. Ghana and Nigeria are also expected to see lower output this season.
Source: Admis
