Conab Lowers Brazilian 2024 Production

COFFEE

March Coffee was slightly higher overnight after a disappointing close yesterday in which the market gave back its gains from earlier in the session. The market has been drawing support at times from concerns about the upcoming crop, but yesterday it also saw a revision lower in 2024 estimates by the Brazilian agricultural  statistics agency Conab. The group lowered its projection for the 2024 coffee crop by 0.57 million bags to 54.21 million, mostly due to smaller than expected robusta output. This was down from a previous estimate in September of 54.78 million. Arabica production was projected at 39.59 million bags, mostly unchanged from September, but robusta was lowered to 14.61 million from 15.20 million previously. This was a bit of a surprise, as many analysts had projected larger numbers, particularly for robusta. (In December, USDA put Brazil’s total 2024 crop at 66.4 million bags, with arabica production at 45.9 million and robusta at 21.0 million.) The 2024 crop was below 2023, despite it being an “on-year” in the biennial cycle for arabica beans. World Weather Service reported some light rainfall in the northwestern corner of Minas Gerais over the past 18 hours. The decrease in rains may be welcome after the ample rainfall Brazilian growing regions have received over the past couple of months. Indonesia rainfall could see flooding possible in some areas.

cup of coffee beans

COCOA

March Cocoa traded inside yesterday’s range overnight. This follows higher action yesterday in the wake of a sobering decline in Ivory Coast port arrivals last week to below year ago levels for the first time this season. Cumulative arrivals are up 24.7% from a year ago but 4.9% below the five-year average. Traders are monitoring the weather in west Africa to determine the impact of the seasonal Harmattan wind. Indications of a drier than normal dry season have raised concerns about the upcoming midcrop. World Weather Service reports little or no rain in west Africa over the past 24 hours. Showers and thunderstorms could reach coastal during the next week, but most of the production region away from the coast will remain dry for a few more weeks. Seasonal rainfall can begin in early to mid-February. The Harmattan wind could will be light to moderate over the next week to ten days, inducing some warmer than normal temperatures and quick drying conditions. Ghana’s president has named a new acting head of Cocobod, the state cocoa regulator. Ghana’s output has fallen to a two-decade low due to poor weather, tree disease, and illegal gold mining that poisons cocoa production areas. Chocolate manufacturer Barry Callebaut reported lower sales volume than expected for its first quarter, as it faced order delays and clients renegotiating product prices with retailers amid higher cocoa costs. The company expects its annual volume to fall by a low single-digit versus a previous forecast for flat sales. They did see 63.1% growth in constant currency, as expected.

COTTON

As has been the pattern over the past several month, the cotton market saw a brief rally off improved export data but failed to hold its gains. March Cotton spent one day above the 9-day moving average but was back below it overnight. A decline in the dollar this week to its lowest level since December 23 improves the export outlook somewhat, but overall US export sales are very poor, and the dollar is 8% higher than where it was in September. Lower prices appear to be the only driver of US sales. There may have been some relief that President Trump did not impose tariffs on his first day in office, but he has mentioned 25% tariffs on Mexico and Canada and a 10% tariff on China to begin February 1. China and Mexico are the fourth and fifth largest buyers of US cotton so far this year at 682,00 and 610,000 bales respectively. Pakistan is in for 1.8 million, Vietnam at 1.6 million, and Turkey at 1.0 million. China has issued a “comprehensive rural revitalization plan” for 2024-27, which includes “optimization of market regulation mechanisms for cotton and other products. World Weather Service mentioned that eastern Australia summer crops will be looking for greater precipitation before too much longer. Some dryland western production areas in Queensland and New South Wales already have a need for greater rain and that need will increase this week. Cotton areas are rated favorably in most of eastern Australia, although timely rain must occur to protect production potential in unirrigated fields.

SUGAR

March Sugar was higher overnight following yesterday’s decline to its lowest level in almost two years. The market sold off on news that India would allow 1 million tons of sugar exports this year. There had been talk about this for a week, so it was not a total surprise, but the fact that they are allowing exports has analysts reassessing Indian production. The Brazilian research company CTC reports that yields on Brazilian sugarcane farms went down 10.8% to an average of 78 metric tons per hectare in 2023, However, sugar content in sugarcane was 1.3% higher last year at 136.3 kilograms per ton. Forecasts for 2025 are calling for a similar crop size to 2024 around 600 million tons.

 

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