UNICA Report Surprises

SUGAR

March Sugar extended last week’s selloff overnight and fell to the 200-day moving average for the first time since September. The UNICA report last week surprised the market with an increase in Brazilian Center-South production for the second half of November after the region saw a sharp decline in the first half. The report showed production at 1.084 million metric tons for the second half of November, which was down from 1.409 million a year ago but up from 901,000 in the first half of the month. The reading for the first half was unusually low, with production down 59% from a year prior. Cumulative production for 2024/25 has reached 39.631 million tons, down 3.7% from this point last year. The arrival of the rainy season in Brazil has eased concerns about the upcoming crop following a severe drought this year and wildfires the high cane fields. The rain has also been expected to bring a halt to current crop harvest.’

Cup of sugar

COCOA

March Cocoa reached another new contract high overnight after Ivory Coast cocoa arrivals fell to 75,000 metric tons for the week ending Sunday, down from 85,000 the previous week but up from 62,000 for the same week last year. Cumulative arrivals for the 2024/25 marketing year, which began on October 1, have reached 895,000 tons, up from 674,000 for the same period last year but below the five year average for this point in the season of 905,900. Arrivals have fallen for the third straight week and are below the average pace for the first time since November 11. Arrivals tend to peak for the year in early November, but the slowdown raises additional concerns that this year’s crop, while better than last year, will not be enough to avoid another production deficit this year. The Harmattan wind is expected to bring warmer than normal temperatures and quick drying conditions to west Africa over the next week to 10 days.

COFFEE

March Coffee is chopping around as it tries to asses the risk to the 2025 Brazilian Crop. The market reached all-time highs last Monday in reaction to a revision lower by Volcafe that put the crop at 34.4 million bags, but this has been dismissed by other traders as being too small, citing other analysts’ forecasts of 38-42 million. That’s not to say there won’t be other revisions lower by other analysts. At issue is how much the trees were damaged by the drought. There have been anecdotal reports of poor cherry development. Brazil’s 2024/25 sales have reached 79% of the expected output versus 69% at this point last year, which suggests to some that farmers may not be in a hurry to sell. Late last month the Brazilian real fell to historic lows, and it has remained near that level, a situation that would typically encourage producers to sell. The head of the Coffee Commerce Center of Vitoria, an industry group in Brazil’s top robusta-producing state of Espirito Santo expects the Brazil to export more than 9 million bags of robusta beans in 2024, up from 4 million in 2023. As of November, Espirito Santo had had accounted for 6.6 million bags of the total 8.7 million Brazil had exported for the year. They hope to export similar amounts in 2025. Vietnam’s crop problems last year allowed Brazil to capture more market share. Recent heavy rains in Vietnam’s Central Highlands have raised concerns about delayed harvest and possible crop damage to their robusta crop. Heavy rains continued over the weekend.

COTTON

The cotton market is having a difficult time escaping the poor outlook for US exports. With the dollar in the vicinity of two year highs, US exporters can only drum up sales when prices are low. Once the market rallies off some good export news, sellers step in. The exports sales report last week showed net sales of 156,333 for the week ending December 5, down from 170,663 the previous week below the 300,000+ that were seen for a couple of weeks in November. Cumulative sales for 2024/25 are the lowest for this time of year since 2015. Sales have reached 66% of the USDA forecast versus a five-year average of 74% for this point in the marketing year. Sales to China have fallen off since 2022/23. China appears to have a strong crop this year, and a poor US crop last year coupled with US sanctions against cotton goods from Xinjiang sent buyers to Brazil.

 

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