COCOA
December Cocoa has fallen through trendline support over the past three sessions after failing a breakout rally last week. The EC said it would propose delaying implementation of the European Union’s anti-deforestation law (EUDR) following calls from industry organizations and governments around the world, and this has eased concerns that the regulation would cause bottlenecks and drive up prices in Europe. So far, 20 of the 27 member states have asked Brussels to scale back and possibly suspend the law. The West African main crop is in harvest now, and the weather conditions this summer have suggested a strong crop to start. Ivory Coast arrivals have picked up in recent weeks and have been above year ago levels.
COFFEE
December Coffee is near unchanged this morning following yesterday’s selloff. The weather models continue to indicate that beneficial rain will reach Brazil next week that could induce flowering and bring some relief to stressed trees. The unloading of hundreds of containers with imported coffee beans at US East Coast ports have stopped due to the port workers strike, which will support domestic US prices but not necessarily the futures. ICE arabica stocks were unchanged yesterday at 801,344 after declining for seven straight session. Stocks are at their lowest since June 11, and most of them (93%) are held in Antwerp, Belgium.
COTTON
Heavy rains in the southeastern US have damaged part of the US crop, but demand concerns remain with poor export sales and a dockworkers strike that could hurt exports even further. The strike is against container carriers, but the Union says all shipping from Maine to Texas will grind to a halt. The US dollar was higher for the fourth straight session overnight and traded to its highest level since August 19, which makes US cotton less competitive on the world market. Export sales will be released this morning, and the data will be as of last Thursday, prior to the strike. Last week’s report showing net sales of 87,784 bales for the week ending September 19, which was the lowest since August 1. Exports totaled 79,504 bales, also the lowest since August 1. World Weather Service has been keeping an eye on a tropical disturbance in the Caribbean that could develop into a storm that would threaten Florida or the Gulf Coast. Dry conditions in west Texas are good for harvest there. Higher oil prices are supportive to cotton but probably not enough to offset poor exports and the strong dollar.
SUGAR
Weather forecasts continue to indicate that beneficial rain will reach Brazil next week that would improve prospects for their 2025 cane crop. Key major growing areas in Sao Paulo state received some light rain in the last 18 hours, and Parana received even more. The sugar market saw a sharp rally last month off concerns that Brazil’s 2024 cane harvest would end early and the 2025 harvest would start late due to the dry conditions, and this chance that relief is finally coming has put pressure on the market this week. If the rains disappoint, the market could resume its uptrend.
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