End of Dockworkers Strike Eases Concerns

COCOA

December Cocoa edged lower overnight and traded to its lowest level since September 4. The market has turned negative this past week after trading to a two-month high last week. A return of rain to west Africa has eased concerns about the main crop production. For the most part, conditions have been favorable this summer, and growers have not appeared to be too concerned about a dry spell that emerged in August and September. The trade is aware that a strong crop could mean a global surplus in 2024/25 after three years of deficits. World Weather Service says rain should continue to fall regularly from Ivory Coast to southeastern Nigeria and Cameroon through the next week. Some days will be much wetter than others with clusters of light to moderate and locally heavy rain occurring on occasion while rain will be isolated and light other days.  News this week that European Union may be considering a delay to the implementation of their s anti-deforestation law (EUDR), which is due to begin at the end of this year,  has eased concerns that the regulation would cause bottlenecks and drive up prices in Europe. Ivory Coast arrivals have picked up in recent weeks and have been above year ago levels.

COFFEE

December Coffee was higher overnight following three straight sessions of lower prices. The market felt some pressure this week as the prospect for rain improved in key growing areas of Brazil, but question of whether there will be enough rain could limit further downside in the market. The crop needs rain to induce flowering for the 2025 crop, but its needs significant amounts to ease stress on the trees brought on by the extended drought this year. World Weather Service said that many areas could see 10-25 millimeters next week with some local amounts reaching 45 mm. This should be sufficient to induce some flowering, but follow up rain will be needed. WWS is not convinced that this is start of a “normal” rainfall situation. The end of the port workers strike eases concerns about supplies backing up on ships. ICE arabica stocks were down 5,470 bags yesterday at 795,874, their lowest since June 4, but the amount pending review increased by 3,560 bags to 58,390.

COTTON

December Cotton was is slightly higher this morning but inside yesterday’s range. The end of the dockworkers strike eases what concerns there were about potential interruptions to exports. Crude oil extended its rally overnight, which is supportive to cotton on ideas that higher oil prices make man-made fibers more expensive. The Dollar Index has backed off from yesterday’s six-week highs, which could ease concerns about US export competitiveness. US export sales were slightly better last week but not that impressive. Yesterday’s report showed net sales of 95,847 bales for the 2024/25 (current) marketing year and 39,600 for 2025/26 for a total of 135,447 for the week ending September 26. This was up from 87,784 the previous week and was the highest since August 22. Shipments totaled 107,071 bales, up from 79,504 the previous week. Cumulative sales for 2024/25 have reached 5.055 million bales, down from 5.780 million at this time last year and below the five-year average of 7.653 million. Sales have reached 46% of the USDA forecast versus a five-year average of 59% for this point in the marketing year. The largest buyer was Vietnam at 29,084 bales, all for 2024/25, followed by Pakistan at 25,411, Peru at 13,970, Guatemala at 11,312, and China at 84,85. Malaysia canceled 17,600 for 2024/25 and bought 39,600 for 2025/26 for a net of 22,000. Mostly dry and favorable conditions for crop maturation and harvesting are expected in the Delta and the Southeast for the next two weeks.

SUGAR

World Weather Service said that a wetter pattern will begin for center-south Brazil next Tuesday, with nearly widespread rain by Friday, but they added that if follow-up rain does not occur soon after, soils would quickly dry out again. This uncertainty has kept a bid under the sugar market, as the extended drought in the region has lowered expectations for the current and upcoming cane crops. The market may also be finding support from higher crude oil prices, which increases the profitability of using cane for ethanol production instead of sugar. The USDA FAS said in a report yesterday projected Mexico’s sugar production at 5.4 million metric tons for 2024/25 (Oct-Sep), up 8% from 2023/24. They also put China’s production at 11 million tons, up 600,000 from last year. Consumption is forecast at 15.6 million tons, which leaves room for plenty of imports.

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