2025 Crop Condition Remains in Doubt

 COFFEE

March Coffee drew mild support yesterday and overnight, and it could test Monday’s three-week high today. The Brazilian crop has seen improved weather over the past couple of months, but the condition of the 2025 crop remains in doubt. Earlier this season there were reports of strong branch growth but poor cherry development. Minas Gerais, Brazil’s primary arabica growing region, received light rain of up to 8 millimeters over the past 18 hours after seeing heavier rains earlier this week. A general pattern of periodic rainfall is expected, and this does improves the outlook for tree health, if not for this year’s crop. Brazilian trade group Cecafe reported this week that Brazil exported 3.41 million bags of green coffee in December, down 10.5% from a year earlier. For the year, the nation exported a record 50.4 million bags (including industrialized coffee), with both arabica and robusta exports at record highs. Exports were up 28.5% from 2023, and they beat a previous record of 44.7 million from 2020. However, the head of Cecafe said he does not expect Brazil to reach new record exports in 2025.

coffee in wood spoon

COCOA

March Cocoa is higher this morning, following a selloff yesterday in the wake of 4th quarter grind data from Europe, Asia and North America. The data confirmed what traders had suspected, that the grinding were lower than a year ago, but they may not have been as bad as feared. Total grind for the three regions was 644,725 metric tons in the 4th quarter, down from 665,911 for the same period last year. For the entire year, grind reached 2.701 million tons versus 2.708 million in 2023. North American grind came it at 102,761 tons, down 1.2% from the same period a year earlier. The total grind for the year was 430,489 tons, up from 414,010 in 2023 but below the average of the previous five years at 458,946. As reported yesterday, Europe’s 4th quarter  grind was  down 5.4% from the same period in 2023 and Asia’s was down 0.5%. News that companies exporting from Ivory Coast were overpaying suppliers where necessary to meet their targets was viewed as supportive. The sources said the companies were overpaying because production for 2024/25 has been lower than forecast. Industry sources also told Reuters yesterday that Barry Callebaut and Olam have been buying fewer cocoa beans from Ivory Coast since mid-December after a rise in port prices. Buyers said they deliberately stockpiled beans for longer than the 15-day limit imposed by the CCC, creating an “artificial” shortage that pushed exporters to accept higher prices. Coastal areas of Ivory Coast received light rain over the past 24 hours, but the rest of the region was dry. ICE certified stocks fell 8,906 bags yesterday to 1.292 million, the lowest since December 2003.

COTTON

March Cotton is near unchanged this morning after falling to a new contract low yesterday. The market reached its low for the day ahead of the weekly export sales report. The report came in better than expected, and cotton rallied in response, but it fell back to the lows of the day by the close. The exports report showed US cotton sales for the week ending January 9 at 316,248 bales for the 2024/25 (current) marketing year and 1,320 for 2025/26 for a total of 317,568. This was up from 137,382 the previous week and was the highest since November 21. Cumulative sales for 2024/25 have reached 8.068 million bales, down from 9.306 million at this time last year and below the five-year average of 10.732 million.  Sales have reached 78% of the USDA forecast versus a five-year average of 82% for this point in the marketing year. The largest buyer this week was Turkey at 102,078 bales, followed by Vietnam at 79,390, Pakistan at 56,620, Bangladesh at 24,083, and China at 18,690. Pakistan has the most commitments for 2024/25 at 1.773 million bales. They are followed by Vietnam at 1.553 million, Turkey at 1.019 million, and China at 682,000. La Niña-inspired rain events in Brazil have the potential to slow the soybean harvest, which could delay Safrinha cotton planting. Brazil is coming off a couple of very strong production years. In 2023/24 Brazil’s cotton exports exceed US exports for the first time in 100 years, and they are forecast to repeat that performance in 2024/25.

SUGAR

March Sugar is lower this morning and approaching Wednesday’s five-month low. The market fell under heavy pressure this week on reports that the Indian government was considering lifting their export ban. A local publication said the move was imminent and that the government will allow exports of up to 1 million metric tons. Yesterday, Reuters reported that shares of in Indian sugar mills surged after local media reports that the government is preparing for a final decision on proposed ethanol price hikes. Higher ethanol prices could entice crushers to focus on more ethanol and less on sugar. The bi-monthly UNICA report on Brazilian Center-South sugar production this week showed cane crush and sugar production fell sharply in the second half of December, with cane crush down 64.9% from last year, and sugar production down 71.1%. Ethanol production was down only 8.1%, as ethanol’s share of crushing capacity increased to 68.3% from 64.3% previously. Cumulative sugar production for 2024/25 has reached 39.780 million tons versus 42.060 million at this point last year.

 

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