Downward Track in Cotton Resumes

COCOA

Europe and Asia 4th Quarter Grind Down from 2023

March Cocoa was moderately lower overnight as 4th quarter grind for Asia and Europe showed declines from a year ago. Europe’s grind totaled 331,853 metric tons in the 4th quarter, down 5.4% from the same period in 2023. The total grind for 2024 was 1.410 million tons, down 1.7% from 2023. Asia’s 4th quarter grind totaled 210,111 tons, down 0.5% from the same period in 2023. The total for 2024 was 859,607 tons, up from 858,675 the previous year. German 4th quarter grind totaled 90,966 tons, down 7.6% from a year ago. Their total for 2024 was 397,969 tons, up 1.3% from the previous year. These reports may have been disappointing to the bulls after Lindt reported strong “organic” 4th quarter sales growth earlier this week. The market awaits the North American numbers, which are due out this morning. World Weather Service said yesterday that West Africa rainfall will be limited to a few areas near to the coast, which is normal for this time of year. The environment will be good for maturation and harvesting. Seasonal rains will return in February, but Harmattan wind over the next 7-10 days could bring warmer than normal temperatures and quick drying conditions. The southeast corner of Ivory Coast received some light rainfall of 7 mm over the past 24 hours.

 

COFFEE

March Coffee is near unchanged this morning after yesterday’s recovery rally off supportive Brazilian export data for December.  The market remains in a tight consolidation range, being supported by concerns over Brazil’s upcoming crop, but those concerns have been mitigated by decent rainfall over the past couple of months. Brazilian trade group Cecafe reported yesterday that Brazil exported 3.41 million bags of green coffee in December, -10.5% from a year earlier. Arabica exports were -13.1% at 2.84 million bags, while robusta exports were +5.1% to 562,978 bags. For the year the nation exported a record 50.4 million bags (including industrialized coffee), with both arabica and robusta exports at record highs. Exports were up 28.5% from 2023, and they beat a previous record of 44.7 million from 2020. Green coffee shipments rose 30.2% on the year to 46.3 million bags. The head of Cecafe said he does not expect Brazil to reach new record exports in 2025. Their 2025 arabica crop is expected to be smaller, but the robusta crop is expected to be larger. He also said he expects exports to China to increase in 2025 after a slowdown in 2024. Traders interviewed by Reuters said Vietnam prices slipped this week as farmers released more beans ahead of the New Year holiday. Another trader said the weather conditions were more favorable and that drying activities were going smoothly. World Weather Service said yesterday that periodic showers and thunderstorms will impact all Brazilian coffee production areas at one time or another during the 7-10 days. The precipitation will be light to moderate with a few locally strong thunderstorms producing pockets of heavy rain today.

 

cotton bolles

 

COTTON

March Cotton resumed its downward track overnight, taking out Monday’s low in the process. So much for low prices bringing in buyers. The weekly export sales report will be released this morning, and by the market action overnight, the trade does not appear very optimistic. Last week’s report showed net sales of 138,382 bales for the week ending January 2, which was up from 134,146 the previous week (old and new crops combined) but below the average of the previous four weeks at 200,194. Cumulative sales for the 2024/25 marketing year had reached 7.752 million bales, down from 8.886 million at this point last year and below the five-year average of 10.456 million. This is the slowest pace since 2015/16. The USDA lowered its 2024/25 cotton export estimate by 300,000 bales in last Friday’s supply demand report. Based on those changes, we estimate upland sales were running at about 63% of the USDA forecast for the marketing year as of January 2, up from 61% last year and above the five-year average of 60% for this point in the season. World Weather Service said yesterday that Brazil’s wetter-biased pattern could raise concerns that early soybean harvest delays could lead to some delays in Safrinha cotton planting. They said this could be a problem if La Niña conditions increase in February and further delay the harvest. However, La Nina is expected to be in a strong diminishing trend during March and April, which may reduce the potential for longer lasting rainfall. China’s commerce ministry has accused the US firm PVH, the parent company of Calvin Klein and Tommy Hilfiger, of engaging in “improper” conduct related to the Xinjiang region.

 

SUGAR

March Sugar is higher this morning after falling to its lowest level since August 21 yesterday. The fact that the market managed to hold above the August lows may have disappointed the bears and brought in some short covering. The bi-monthly UNICA report on Brazilian Center-South sugar production, released during the session yesterday, showed cane crush and sugar production fell sharply in the second half of December. This is not unusual this time of year. However, cane crush for the period was down 64.9% from last year, and sugar production was down 71.1% . Ethanol production was down only 8.1%, as ethanol’s share of crushing capacity increased to 68.3% from 64.3% previously. Production tends to drop off sharply this time of year as the arrival of seasonal rains slow harvest and crushing activity. The trend towards more ethanol production could be viewed as supportive to the market. The Indian publication ET Now said this week that the Indian government’s restrictions sugar exports may end soon and that the government may allow 1 million tons of exports.

 

 

 

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