March Cocoa Moderately Higher

COCOA

March Cocoa was moderately higher overnight following the steep selloff on Friday, which appeared to be set off by long liquidation/profit taking but led to a steeper decline due to thin holiday conditions. The weather forecast for west Africa continues to show hot and dry conditions, which is seasonal. A mostly dry and warm to hot weather pattern is expected to prevail. Harmattan wind speeds should be near average, but the low humidity, abundant sunshine and wind will stress some trees. Ivory Coast cocoa arrivals totaled 82,000 metric tons for the week ending December 29, up from 77,000 the previous week and the highest since December 8. The five-year average for this week is 80,000. Cumulative arrivals since the marketing year began on October 1 have reached 1.054 million tons, up from 827,000 a year ago and below the five-year average of 1.071 million. The dry conditions of the past several weeks has the trade on the lookout for a sharp drop in arrivals in the new year. Arrivals have a seasonal tendency to drop off after mid-January. ICE certified stocks fell another 10,619 bags on Friday to 1.283 million, the lowest since December 2003. Stocks are down 198,000 since the end of November.

 

cocoa powder and chocolate bits

 

COFFEE 

March Coffee is lower this morning and could test the bottom of the recent consolidation range today. Decent periods of rain continue to reach Brazilian growing areas, which eases some concerns about the upcoming crop. Analysts have been concerned that the extended drought this year has damaged the crop’s potential too much, but the ongoing rains suggest the crop will not be as damaged as previously feared. There are concerns that rainy weather in Vietnam could cause disease problems with their crop, which is currently being harvested. Technical divergence at the all-time highs in December has traders on the lookout for a top.

 

COTTON

March Cotton is higher this morning as the market may be taking a more optimistic viewpoint (or at least less pessimistic) viewpoint on demand. The dollar has eased back from 26-month highs over the last few sessions, which may be providing some optimism on that front. Friday’s export sales reports showed US cotton sales for the week ending December 19 at 279,056 bales for the 2024/25 (current) marketing year and 29,480 for 2025/26 for a total of 308,536. This was up from 201,759 the previous week and was the strongest since November 21. The largest buyers this week were Turkey at 116,168 bales and Vietnam at 104,470. This was Turkey’s largest purchase for the marketing year, and it was Vietnam’s second largest. China was a net seller of 4,313 bales. Cumulative sales for 2024/25 have reached 7.486 million bales, down from 8.492 million at this time last year and below the five-year average of 10.061 million. They are the lowest for this point in the season since the 2015/16 marketing year. Sales have reached 71% of the USDA forecast versus a five-year average of 77% for this point in the marketing year. Pakistan has the most commitments for 2024/25 at 1.661 million bales, followed by 1.425 million for Vietnam, 814.000 for Turkey, 652,700 for China, and 602,700 for Mexico.

 

SUGAR

March Sugar traded in a wide range overnight after reaching a 3 ½ month low last week. Friday’s UNICA report on Brazilian Center-South production reportedly came in “at expectations,” but it also showed cane crush and sugar production falling substantially in the first half of December, which was a big turnaround from the surprise increases during the second half of November. Cane crush for December 1-15 was down 54.3% from last year, and sugar production was down 63.1% . Ethanol production was down only 26.9%, as ethanol’s share of crushing capacity increased to 64.3% from 56.9% previously. The surprise increase in sugar production in the second half of November was clearly an aberration from the overall trend. Production tends to drop off sharply this time of year as the arrival of seasonal rains slow harvest and crushing activity. However, ample rains since the arrival of the rainy season has improved the outlook for next year’s crop. Last week there were also indications that India’s cane yield may not be a strong as previously hoped. Brazil’s push to more ethanol production could also support sugar prices.

 

 

 

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