US Cane Crop Damaged

SUGAR

March Sugar is higher for the second straight session as it recovers from a move to its lowest level in almost two years on Monday. Concerns over the condition of US cane crops in the wake of extreme cold in Louisiana and Florida have supported the market after the break this week on news that India was planning to allow exports for the first time in over a year. World Weather Service pointed out that while the heavy snowfall in Louisiana may help protect the crown of the cane plants from the cold, the single-digit temperatures could destroy all of the vegetative growth and set the crop back in a significant manner, resulting in declines in production. A better assessment of the impact will come after the region warms up, but the true effects may not be known until the harvest next fall. A poor crop would increase US import needs and pull sugar from the world market.

COFFEE

March Coffee took out the December contract high overnight on concerns over tight near term supply in Europe on top of concerns over Brazilian supply. March London futures reached their highest level since December 10 overnight but were well short of the contract high from that day. Conab this week lowered its estimates for 2024 Brazilian coffee production, especially for robusta coffee. Total Brazil coffee production for 2024 was lowered to 54.21 million bags from 54.78 million in September. Arabica production was projected at 39.59 million bags, mostly unchanged from September, but robusta was lowered to 14.61 million from 15.20 million previously. Traders also cited a sharp, 22,921-bag decline in ICE arabica stocks on Tuesday, which was their biggest daily decline since September. Reuters reported that the Vietnam coffee price was up slightly this week following the rally in London prices, but traders also said local activity was light ahead of the Lunar New Year holiday. Brazil’s coffee growing areas saw pockets of heavy rain over the past 24 hours. Other areas had a mix of moderate to no rain. A return of frequent shower and thunderstorm activity is expected during the weekend and next week which should bring temperatures down once again and ensure favorable soil moisture continues into early February.

COCOA

March Cocoa is chopping around inside the range of the past few sessions, following its gap higher on Tuesday. The market has rallied this week on renewed concerns over Ivory Coast production in the wake of a drier than normal dry season. Ivory Coast port arrivals fell below year ago levels for the first time this season, and traders are viewing this as an indication that the main crop production is coming to an end. Yesterday, a pod counter and director of an exporting firm told Reuters they expect about 100,000 fewer metric tons of cocoa to arrive at Ivory Coast ports between February and March compared to last year, with expectation of 150,000 tons versus 250,000 last year. Cumulative arrivals as of Sunday had reached 1.191 million tons, up 236,000 from last year at this time. These numbers suggest the lead over last year will drop to 136,000 by the time the main crop season ends. The counter also told Reuters that many farmers around the 13-region cocoa belt have no beans left to harvest for February and March. Twelve farmers said the lack of rain since November and very hot weather had destroyed flowers and young pods. On the other hand, representatives of the Coffee and Cocoa Council (CCC), Ivory Coast’s cocoa regulator, say they are not surprised by the slowdown and that 2024/25 production is in line with their forecasts, which were revised down to 1.3 million tons in November from 1.5 million previously. The CCC has sold 1.3 million tons worth of export contracts and they are expecting 1.3 million tons of arrivals between the main and mid crops. No rainfall was reported in west Africa over the last 24 hours. World Weather Service says expects most of the production areas from the coast will to remain dry for a few more weeks. Season rainfall can begin in early to mid-February. ICE certified stocks fell 11,972 bags yesterday to 1.281 million, their lowest since December 2003.

COTTON

March Cotton extended yesterday’s selloff overnight, and it appears to be drifting back to last week’s contract lows. The trade is clearly not convinced that last week’s surprisingly strong export sales marked a change in trend. Farmers apparently are all to eager to unload product on rallies. The possibility of tariffs on imports from China have lowered export prospects even further on fears of retaliation. There does not seem to be any impetus by Chinese buyers to load up ahead of the tariffs, but then again China has not been as big a buyer as they have in the past, having already switched their business to Brazil. The break in the dollar this week is mildly supportive, but it is coming off of two-year highs.

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