COCOA
March Cocoa continues to consolidate inside the December range, as it awaits 4th quarter grind data for Europe, Asia, and North America, which are due to be released tomorrow. Grind numbers have been surprisingly strong in previous quarters in the face of sharply higher prices. Chocolate demand appears to have held up well despite higher retail prices. Traders will be watching how grind held up in the fourth quarter in the wake of the move to new all-time highs in cocoa prices. Nearby cocoa increased by 51% increase from September 30 to December 31. Brazil’s cocoa grind fell to 59,589 metric tons in the 4th quarter, down 5.5% from the same period last year. Grindings for all of 2024 totaled 229,334 tons, down 9.5% from 2023, according to AIPC, an organization of companies with cocoa operations in Brazil. Brazil cocoa arrivals were also down due to smaller production in the wake of drought and disease. According to the ICCO, Brazil was the world’s sixth-largest producer in 2023 at 200,000 metric tons, roughly 5% of total world production. The largest producer was Ivory Coast at 1.740 million tons. West Africa received no rainfall in the last 24 hours. ICE certified stocks fell 4,465 bags yesterday to 1.301 million, their lowest since December 2003. The last time stocks increased was on December 31, 2024.
COFFEE
March Coffee saw a mild selloff yesterday but was slightly higher overnight, as it continued to stay inside a month-long range. The market reached new all-time highs in December on concerns over the 2025 crop. A period of potentially crop-saving rains over the past two months has mitigated those concerns, but the question is whether they came in time. Dealers interviewed by Reuters said yesterday that Brazil’s robusta crop is in good shape and that the nation could even surpass Vietnam as the world’s top robusta producer in 2025. In their most recent update, USDA put Vietnam’s 2024 robusta production at 29.0 million bags and Brazil’s at 21.0 million. This compares with Brazil’s arabica production at 45.4 million. Brazil’s main arabica producing area continues to see rain, with moderate to light amounts reported over the past 18 hours. WWS said yesterday that periodic showers and thunderstorms will impact all coffee production areas at one time or another during the next week to ten days.
COTTON
March Cotton had a mild setback yesterday and overnight, but it is slightly higher this morning. There is some hope that the move to new lows in the wake of the bearish USDA supply/demand report on Friday will spark cash buying interest. Crude oil prices are higher today after slipping yesterday, and this also supports cotton on ideas that high oil prices make polyester more expensive. The dollar is down for the second straight day after reaching its highest level in more than two years on Monday, which also lends mild support to cotton. The strong dollar has been a negative factor for cotton, as it makes US exports less competitive on the global market. The recent Commitments of Traders Report showed managed money traders were net short 39,342 contracts versus a record net short of 52,024 from last August. This suggests there is room for more selling if funds get active.
SUGAR
March Sugar extended this week’s selloff overnight, but it is close to unchanged this morning. The market has seen pressure this week on reports that India may allow sugar exports after curtailing them since October 2023. The bi-monthly UNICA report on Brazilian center-south sugar production, covering the second half of December, will be released today. The last report showed that as of December 16, cumulative sugar production for 2024/25 was running 5.1% below a year ago, and ethanol production was running 3.3% higher. Sugar’s share of cane crush fell to 36% during the first half of December, and ethanol’s share rose to 64%. Recall that a surprisingly high number for the second half of November helped spark a steep selloff in mid-December, and a return to lower output in the first half of December only generated a one-day rally. Brazil rains have improved the outlook for 2025 production. Thailand is seeking negotiations with China to lift their ban on imports of sugar syrup and premixed powder from Thailand. According to Czarnikow, Thailand was the main supplier of liquid sugar to China last year, with shipments of more than 1.2 million metric tons. In December, China suspended imports of syrup, and premixed powder on concerns over factory hygiene. China has asked to review 78 sugar factories. The ban has left about $11.6 million worth stranded on ships. Thailand is the world’s second-largest sugar exporter, and the ban could lead to excess supplies in the international market.
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