Dec Coffee Sharply Higher

COFFEE

December coffee is sharply higher this morning on a strong export reports from Brazil and a sharp recovery in the Brazilian real yesterday that eases pressure on roasters to sell. Perhaps the market had gotten a bit oversold on the recent rainfall in Brazil. Brazil exported 279,261 tons of green coffee in October, up from 249,375 for the same period last year (a gain of 12%). World Weather Service maintains that Brazilian coffee areas will be sufficiently wet to support ongoing crop development, but there are still concerns that the trees were too damaged from the extended drought this year to produce a strong crop. Indonesia has seen some rain this week, and increasing amounts are expected this weekend and into next week. This could ally concerns about their robusta crop. Vietnam exported 1.15 million metric tons of coffee in the first 10 months of 2024, down 11.2% from the same period last year, according to government data. In October, the country exported 44,000 tons, up 1.5% from last year. Their harvest pace is expected to pick up this month.

cup of coffee and coffee beans

COCOA

December Cocoa is higher this morning and is close to closing the gap from yesterday’s lower open. The market remains inside a six month consolidation pattern as it digests any hints of how the west African main crop is faring. The general consensus is that the crops will be better than last year. This comes after a report of mold showing up in some Ivory Coast cargoes resulting from heavy rains earlier this fall. Ivory Coast arrivals are off to their strongest start in five years. A more optimistic tone from farmer interviews in Ghana helped pressure the market yesterday. World Weather Service expects seasonal dryness in most of west Africa’s main growing areas, which should help crop development and ease concerns about disease.

COTTON

December Cotton was sharply higher overnight after falling to a two-month low yesterday. The market was pressured by a strong dollar in the wake of the Trump victory. The dollar has given back some of those gains overnight. High US tariffs could threaten US cotton exports, but the market may have also gotten oversold on that theme. Hurricane Rafael is expected to move through the Gulf of Mexico Thursday through Sunday, with some gradual weakening is expected. Some models suggest it will dissipate over open water, and others suggest it will make landfall in Louisiana. Regardless, heavy rain is expected in west Texas and the Delta over the next five days, which could slow harvest and damage open bolls. The US crop was 63% harvested as of Sunday and was advancing rapidly.  For the USDA supply/demand report on Friday, a Bloomberg survey of analysts has an average expectation for US 2024/25 cotton production at 14.08 million bales (range 13.6-14.3 million) which would be down from 14.2 million in the October update. Exports are expected at 11.46 million (range 11.3-11.5) versus 11.5 in October. Ending stocks are expected around 4.02 million bales (range 3.7-4.2 million) versus 4.1 million in October. World production is expected at 116.33 million bales versus 116.64 million in October, with consumption expected to come in around 115.57 million versus 115.74 million in October and ending stocks at 76.23 million versus 76.33 million in October. Traders may be counting on a strong export sales report this morning.

SUGAR

March Sugar is higher this morning after finding good support at the 50-day moving average yesterday. The market fell early yesterday on the rally in the dollar and the recent improvement in rainfall. However, the Brazilian real recovered yesterday after falling to its lowest level in 4 ½ years late last week, and this has eased pressure on Brazilian sugar producers to sell. If the rains persist, they may also shut down cane harvest for the year. Brazil exported 3.729 million metric tons of sugar in October, up from 2.874 million for the same period last year. Their sugar exports so far in 2024 have already surpassed last year’s record for the year. Exports from the start of 2024 through the fourth week of October reached 31.7 million metric tons versus 31.3 million for all of 2023. India’s prohibition against sugar exports has sent more business to Brazil. Indonesia has imported 2.6 million tons from Brazil  three times last year. India has imported 2.2 million tons from Brazil, up 72% from last year.

 

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