Cocoa Back Above $10,000

COCOA

March Cocoa extended yesterday’s rally overnight to trade to a new contract high and above $10,000. The nearby contract traded to its highest level since September. This followed a brief but sharp decline on Tuesday, which appeared to bring in buyers concerned that the West African main crop, which his currently in harvest, will not be large enough to offset tight supply. As of Sunday, Ivory Coast arrivals were 34% above year ago levels but only 0.7% above the five year average. Heavy rains in October may have damaged some of the crop, and the arrival of the dry season has raised concerns that production will drop off quickly in the new year.

colorful cocoa pods

COFFEE

March Coffee is higher this morning and is back in the vicinity of last week’s 47-year highs after a sharp corrective selloff this week. Traders remain concerned that Brazil’s 2025 crop will struggle from the severe drought earlier this year. The Brazilian real has clawed back some of its losses after last week’s collapse, and this action may have diminished the impulse for Brazilian growers to market what old-crop supply they had left. Brazil data yesterday showed the nation exported 285,447 metric tons of green coffee in November, up from 234,706 for the same period last year. Vietnam exported 1.2 million metric tons of coffee between January and November, down 14.3% from the same period last year. In November, the country exported 60,000 tons, 49% lower than a year ago. Dealers told Reuters this week that about 30% of Vietnam’s crop had been harvested.

COTTON

March Cotton is lower today, perhaps on disappointment that the market did not manage to break through the technically significant 100-day moving average yesterday, something it has failed to do on several attempts over the past week. The weekly export sales report yesterday was not particularly impressive and this contributed to the narrative of lackluster demand. The trade could also be awaiting the monthly US jobs report this morning, as a soft number could portend a Fed rate cut in December, which could weaken the dollar and improve the export outlook. Yesterday’s exports report showed USDA cotton sales for the week ending November 28 at 170,663 bales, down from 324,072 the previous week. This broke a two-week pattern of sales over 300,000, which ware also the highest since last January. Cumulative sales for 2024/25 have reached 6.859 million bales, down from 7.918 million at this time last year and below the five-year average of 9.442 million. Sales have reached 65% of the USDA forecast versus a five-year average of 73% for this point in the marketing year, which could eventually induce the USDA to lower their export forecast.

SUGAR

March Sugar is near unchanged this morning, as the market remains in a potential bull flag formation. Bullish production data from Brazil last week failed to spark a rally. Neither have reports of slow mill activity in India, with sugar production down 35% from a year ago since the new marketing year began on October1. On the bearish side, sugar prices in India have reportedly fallen to their lowest level in 1 ½ years because of ample supply and a slowdown in demand in the aftermath of their holiday season. Brazil exported 3.39 million metric tons of sugar in November, down from 3.64 million for the same period last year. Center-South Brazil is seeing ample rains, which may ease concerns about the 2025 crop, but it could also bring harvest activity to a halt until April or May. Earlier this year there were predictions of very tight supplies for early 2025. As of mid-November, cumulative 2024/25 Center-South production has slipped below year ago levels for the first time.

 

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