Coffee Bounces Off 7-Session Low

COCOA

December Cocoa is lower this morning as it continues its recent selloff, but it remains inside a six-month range. Ivory Coast farmers interviewed by Reuters said that abundant rain in most of the nation’s cocoa growing regions last week boosted the October-March main crop, but there are some potential quality concerns. Buyers complained that some of the deliveries contained moldy beans. Farmers said they were able to get two harvests per month in October and that the main crop would continue in November and December, peaking in December. Recall that Ivory Coast arrivals last week were the highest since January 2023. Periodic shower and thunderstorm activity are expected during the next 7-10 days in West Africa, which should be sufficient to maintain crop development. Seasonal rains could begin to cut back in the second week of November.  The analyst firm BMI is forecasting a 2024/25 global production deficit of 30,000 metric tons versus 440,000 in 2023/24. Ghana’s output was seen at 590,000 tons, up from 450,000 in 2023/24 but below 654,000 from 2022/23.

  

COFFEE

December Coffee was higher overnight after bouncing off a 7-session low yesterday. A stronger rain pattern over the weekend sparked a sharp selloff yesterday, but the market said “not so fast” and closed well off its lows of the day. More rain fell in northern Minas Gerais over the last 18 hours. Scattered showers and thunderstorms are expected through Wednesday with lighter amounts than what was seen over the weekend, but substantial rainfall is expect to arrive late this week through Sunday. This has improved the outlook for the Brazilian 2025 crop after the region suffered a severe drought this year and saw a delayed start to the rainy season. The robusta harvest in Vietnam is expected to pick up next month, which could ease tight supply and pull some support from arabica as well.

 

coffee spilling from cup

 

COTTON

December Cotton was mixed overnight but stayed inside in the upper end of yesterday’s range. The weekly Crop Progress report showed 37% of the US cotton crop was rated good/excellent as of October 20, up from 34% the previous week and 29% a year ago. This was the highest it had been since September 23. The five-year average for this date is 41%. Texas was 28% G/E, up from 23% last week and 10% a year ago, and Georgia was 38%, up from 33% last week but down from 59% a year ago. The five-year average is 58%.  94% of the US cotton crop had bolls open, up from 88% the previous week, and 44% of the crop had been harvested, up from 30% the previous week and 39% a year ago. The Cotton Association of India expects India’s 2024/25 cotton production to fall 7.4% from a year ago because of lower area and excessive rainfall that damaged the crop. In their October WASDE report, the USDA was calling for a 7% decline in Indian production this year, and for India to go from a net exporter of 1.42 million (US) bales to a next importer of 1.0 million. The export sales report last Friday showed net cotton sales were the highest since August 29, but shipments were the lowest since August 1. Australia needs rain.

 

SUGAR

The arrival at last of decent rainfall to Brazil’s center-south region may start to change traders’ attitudes about Brazilian sugar production. The extended drought plus heat this year has started to pull 2024/25 production down, but as of the end of September, total production for the marketing year was still 1.5% ahead of 2023/24. Still, production for the period was down 16.3% from last year, and the recent rains were too late to change that trend. Traders fear that the harvest will end early this fall and start late next spring due to the dry conditions, which could create a tight supply situation this winter. The fires last month did more damage to the upcoming crop than the current crop. However, the recent change to a wetter pattern could improve prospects for the upcoming crop. Czarnikow commented over the weekend that declining wait times for vessels to load sugar at Brazilian ports (the lowest in two years) were indicators of weakening demand.

 

 

 

 

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