London Robusta Contract All-Time High


September Coffee was slightly lower overnight after trading to a new contract high yesterday. Once again it appeared to be led higher by a rally in the London (robusta) contract which traded to a new all-time high after a report that Vietnam’s exports had fallen to 70,202 metric tons last month, down 11.5% from May. This brought January-June exports to 893,820 tons, down 11.4% from last year. Late last week, Safras and Mercado expressed concerns that the robusta harvest in Brazil was not as strong as previously expected and that there could be a reduction in crop estimates. Brazil’s main arabica production area of Minas Gerais has been very dry, and there is still little rain in the forecast. Dry conditions have moved the harvest along at a rapid pace, but there are concerns about small bean sizes. ICE arabica stocks fell by 5,330 bags yesterday to 803,319. Stocks have fallen for four straight sessions and are the lowest hey have been since June 11. The market may also be drawing support from the rally in the Brazilian real, which appears to have put in a spike low last week, as this lessens pressure on exporters to sell.


Coffee plants



September Cocoa had an outside day higher yesterday, keeping a modest uptrend off the July 1 low intact.  The market maybe drawing some support from the lighter rain amounts hitting west Africa this week, as total accumulation this year remains behind average. Comments from Ivory Coast growers this week suggested they were generally pleased with the crop’s progress. The trade is looking ahead to the European second quarter grind data due to be released tomorrow to see how demand is holding up against high prices. The first-quarter grind was down 2.2% from the same period in 2023. North America and Asia grind stats will be released on July 18. In the first quarter, North America’s was up 3.6% and Asia’s was down 0.2%. The trade seems to be anticipating a sharp reduction in grind for the second quarter on ideas that demand did not reflect the full brunt of the high prices in the first quarter, with chocolate manufacturers at the time still having previous, lower-priced cocoa supplies to work through. On the other hand, nearby prices fell to $6418 in May after reaching $11,115 in April, and the market has been chopping around back and forth since then, and this may have afforded the opportunity to price cocoa at better levels than earlier feared. High prices have also encouraged manufacturers to use substitutes, such as palm oil for cocoa butter.



December Cotton was lower yesterday despite a drop in US crop ratings on Monday, and it came close testing its June low at 70.00 overnight. For the USDA report on Friday, a Bloomberg survey shows an average trade expectation for US production at 17.16 million bales, with a range of expectations from 15.8 to 17.9 million. This would be up from 16.00 million in the May update and would reflect the increase in planted area in the June 28 Acreage report. US ending stocks are expected at 5.05 million bales (range 4.00-5.65) versus 4.10  million in March. This would be up from 2.85 million last year, the highest since 2019/20, and the second highest since 2008/09. Exports are expected at 13.23 million bales (range 13.0-14.6) versus 13.00 in June. World ending stocks are expected at 84.28 million bales (range 83.3-85.00) versus 83.49 in March. US weather shows a general trend of warmer than normal conditions across the cotton growing areas but normal to above normal moisture as well, so there is little weather threat.



October sugar was slightly higher overnight following yesterday’s steep selloff to its lowest level since June 27. The market fell below trendline support yesterday, and that line has provided resistance overnight at 19.77. Heavy rains this week in Center-south Brazil offer relief to the cane crop after extremely dry conditions had raised concerns that the harvest could end early this year. The harvest has proceeded at a rapid pace, and the rain could interrupt the harvest in the near term, but it the change could be welcomed by growers. Russia’s first sugar beet test of the season showed an average root weight of 119 grams, up from 100 grams in July last year, according to the Russian Sugar Producers’ Union industry lobby. The French farm ministry estimated the nation’s sugar beet area at 411,000 hectares this year versus 398,000 in estimated last month and 379,000 for last year. Thailand has seen mostly above normal rainfall since early May, which has allowed soil moisture to approach normal levels, but the forecast for the next nine days is mostly below normal.





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