SUGAR
March Sugar is lower today after reaching its highest level since November 7 yesterday. Recent rains may have saved the day for the Brazilian 2025 crop, but the question remains to what degree? World Weather Service says parts of center-south Brazil, including the key cane-growing state of Sao Paulo as well as northern Parana, are expected to see net drying over the next ten days, with a few showers possible. Drier conditions could emerge later this month or early December, but soil moisture is currently described as “abundant.” Louis Dreyfus unveiled a new sugar transshipment terminal in Sao Paolo, Brazil expected to be completed in 2025. It would have a capacity of 1 million metric tons per year and is expected to drive an increase in volumes coming from Brazil’s sugar belt. This could reduce the bottleneck in Brazilian ports that have slowed export shipments in recent years.
COFFEE
March Coffee was higher overnight and came close to testing Monday’s contract high. The market has found support this month from concerns that the 2025 Brazilian crop will suffer from the severe drought this year. Anecdotal reports have suggested that cherry production is low despite ample rains in October that boosted flower production. World Weather Service said Brazil’s coffee areas have experienced frequent rain of significance since the last week of October and that crop conditions have benefited greatly. Rain intensity and frequency has backed off this week, but more is expected for Thursday through Sunday, followed by another period of more sporadic rainfall again next week. Brazil’s trade ministry said yesterday that China’s Luckin coffee signed an agreement to buy 240,000 tons of coffee from Brazil during the 2025-2029 period. ICE certified arabica stocks increased by 5,393 bags yesterday to 879,117, which is their highest since June 2023 but not historically high. New uncertainty regarding the implementation of the EU deforestation rule may cause concerns about exports into Europe. The law was originally supposed to take effect at the end of this year, but last month, a 1-year delay was proposed. Now that delay may be in question.
COCOA
March Cocoa edged higher overnight and was approaching Friday’s seven-month high. The strong pace of Ivory Coast arrivals suggests the 2024/25 main crop is off to a fast start, but reports that Ivory Coast’s Coffee and Cocoa Council have cut their sales commitments by 40% have raised concerns that the crop is not as strong as previously thought. Ivory Coast is heading into its dry season, and the Harmattan winds threaten to lower soil moisture, but they could also reduce the risk of black pod disease, which has also been on traders’ minds. There is also uncertainty about whether the EU may still enforce the Deforestation Agreement that requires importers of agricultural commodities to provide verification that the product did not come from deforested areas if an attempt by right-leaning parties in the European Parliament to delay and water-down the agreement backfires and the law come into effect at the end of December as originally planned. The European Commission proposed a 12-month delay last month. The original proposal did not include any changes to the substance of the law, but the new law would have lighter controls, and it would give EU forested countries a “free pass.” This has upset the original supporters of the deal. Implementation at the end of this year could slow sales into Europe and upset normal flows of the crop.
COTTON
March Cotton was higher overnight following a bounce off a three week low yesterday. The market did manage to avoid taking out the contract low from August 15. The dollar was lower yesterday but was back in positive territory overnight, which may pull some support from cotton. Cotton traders may also be hopeful that the drop in prices has attracted sales. First notice day for the December contract is on Friday, which could boost volatility. Rain is expected over the next week in Australia’s eastern dryland crop region of New South Wales and Queensland, which would improve planting, emergence and establishment conditions.
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