SUGAR
March Sugar is in the lower end of yesterday’s range down action, as the trade awaits the release of the latest UNICA report on Brazil Center-South sugar production today. This report will cover the first half of December. The last report, which covered the second half of the November, was a bearish surprise because it came in higher than the first half of the month, even though it was sharply lower than last year. That report showed production at 1.048 million metric tons, up from 901,000 in the first half but down from 1.412 million the previous year. Cumulative production was 3.7% below a year ago. Production has a tendency to drop off sharply this time of year as the rains bring an end to harvest and crushing activity for the season. The good seasonal rains in Brazil improve the outlook for the upcoming cane crop. There may also be some pressure on the cash end as the crushing season India and Thailand moves along.
COCOA
March Cocoa was slightly higher overnight following a steep selloff yesterday that took it to its lowest level since December 13. Traders blamed year-end profit taking. There is also the possibility that the market has overreacted to seasonally dry conditions in West Africa. As of Sunday, Ivory Coast cocoa arrivals were ahead of a year ago but behind the five-year average. There are concerns that 1) this year’s production will not be sufficient to overcome three years of global deficits and 2) that the recent dry weather will result in a quick decline in output in 2025. World Weather Service expects very little weather change from the dry conditions in West Africa over the next week to 10 days, with rainfall limited to a few areas near to the coast. This is normal for this time of year, and the environment should be good for maturation and harvesting of cocoa. Seasonal rains will return in February. The look for the Harmattan wind to occur steadily, inducing some warmer than usual temperatures and quick drying conditions.
COFFEE
March Coffee is slightly lower this morning as the market continues to consolidate its move to all-time highs this month. High prices and a weak currency may have induced farmer selling in Brazil. The main source of support has been the concern that the drought in Brazil this year will result in a small crop in 2025, despite active rainfall over the past two months. The rains may have come too late, but on the other hand they help in some way. World Weather Service says much of the main coffee production areas in Brazil are likely to experience frequent rain and thunderstorm activity with sufficient rain falling to maintain a very good outlook for cherry development. The Central Highlands of Vietnam may get a few showers infrequently but most of the rain should be light. Rain is not welcome there now, during harvest. In Indonesia, sufficient rain is expected to maintain moisture abundance. A few areas of heavy rainfall might lead to local flooding, but such events should be rare.
COTTON
March Cotton drifted lower overnight, as the market remains less than thrilled with US export prospects and it awaits the weekly USDA exports sales report this morning. Last week’s report (for the week ending December 12) showed a slight improvement over the previous two weeks, but at 201,759 bales, it was not as impressive as the 300,000+ plus that were seen for a couple of weeks in November. Today’s report will be as of December 19, and perhaps the decline to new contract lows last week brought attracted buyers. Cumulative sales are lowest for this time of year since 2015/16, and as of last week, they had reached 68% of the USDA forecast versus a five-year average of 76% for this point in the marketing year. The market has occasionally found buying support on breaks, as low prices have attracted cash buyers. However, the rallies have been limited and have been followed by moves to new lows. World Weather Service says eastern Australia crop conditions are still mostly good, although there is a growing need for rain in some western unirrigated production areas. Rain should resume in about a week. Data released by China’s National Bureau of Statistics earlier this week put the nation’s 2024 calendar-year cotton production at 6.164 million metric tons, up 9.7% from a year ago.
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