COTTON
March Cotton extended yesterday’s selloff overnight to trade to its lowest level since September 16. The market has been under pressure since the USDA report on Friday, which showed a modest decline in the US 2024/25 production forecast and a less modest decline in exports, leading to a modest 200,000-bale increase in US ending stocks. The post-election rally in the dollar and the threat of heavy tariffs from the incoming Trump administration raises concerns about US export prospects. The US cotton harvest did not seem to be affected too much by the rain in Texas last week. The weekly Crop Progress report released yesterday afternoon showed 71% of the US cotton crop had been harvested as of November 10, up from 63% the previous week and 64% a year ago. The five-year average for this date is 67%. Texas was 65% harvested, up from 58% last week, 56% a year ago and a five-year average of 59%. Georgia was 60% harvested, up from 52% last week, 57% a year ago but below the five-year average of 63%. Export sales will be released on Friday due to the holiday today. US CPI this morning could shake up the market if it comes in hot and postpones a rate cut. A low number could pressure the dollar and provide a lift to cotton.
COFFEE
December Coffee is moderately higher this morning following a breakout rally yesterday to its highest level since October 1. Some traders have said that investors are pumping money into commodities in the wake of the US election, but the open interest does not seem to back that up. One would think the rally in the dollar and the pressure on the Brazilian real would encourage selling. On the other hand, demand may be stronger than expected, and the 2025 Brazilian crop is uncertain. Cecafe reported this week that Brazilian green coffee exports in October were the highest for any month on record and up 10.5% from a year ago. Arabica exports were up 7% to 3.7 million bags, and robusta shipments were up 27% to 871,000. Rather than being evidence of burdensome supply, the trade may be viewing this as an indication of strong demand. It may also be due to tight robusta supply still hanging over the market after Vietnam’s poor crop last year. Recent rainfall in Brazil has improved the outlook for the 2025 crop, but the extended drought this year may have caused too much damage. There is even talk of “too much rain,” though no specific reference has been made to Brazilian coffee. World Weather Service says Brazilian coffee areas saw a welcome break earlier this week, but a new round of heavier amounts is expected today and tomorrow. A tropical disturbance in the Caribbean Sea will approach Honduras or Nicaragua late this week that could become a tropical cyclone. A close watch will be made on the storm, but it is expected to with stay away from coffee areas. The remnants of tropical depression Yinxing moved across the Central Highlands of Vietnam yesterday, bringing moderate to heavy rain to the region. Most of Vietnam’s rainfall will be sporadic and light into early next week, leaving little threat to the crop but potentially delaying the harvest.
COCOA
March Cocoa was sharply higher overnight for the second straight session on new evidence that the west African main crop may be smaller than previously forecast. The market has broken out of a six-month consolidation pattern and has traded to its highest level since April 29, which was three days after the market reached record highs. Yesterday, Reuters reported that Ivory Coast’s cocoa regulator, the Coffee and Cocoa Council (CCC), had in recent days reduced its sales of cocoa export contracts for the 2024/25 season by 40% in recent days. This news came from sources inside CCC. This followed a report last week that “constant” rains and floods during October had affected the development of flowers and small pods and was causing a fungal disease called brown rot. The industry had been expecting the main crop to reach 1.5 million metric tons, but that was revised down at the end of October after the heavy rains flooded Ivory Coast’s plantations. Some estimates are as low as 1.30 or 1.35 million tons. Heavy rains are unusual this time of year. Cocoa arrivals at Ivory Coast’s ports have been very strong this season, but some traders are concerned that there will be a sharp decline in December or early January. Others have said that the CCC is being overly cautious, that they don’t want to risk overselling their crops.
SUGAR
March Sugar was near unchanged overnight and was holding near the bottom of Monday’s range, when it broke below the recent consolidation. UNICA released its bi-monthly report on Brazil Center-South sugar production yesterday, and it showed sugar production for the second half of October at 1.785 million metric tons, down from 2.358 million the same period a year ago, a decline of 24.3% . This was only slightly higher than pre-report survey calling for 1.690 million tons produced and more or less confirmed long-held expectations for production to fall off as the season progressed due to the drought earlier this year. Cumulative production for the 2024/25 marketing year is up 0.3% from last year versus +1.9% as of October 16. Ethanol production was lower as well, but not as much as sugar. The share of cane used to produce ethanol increased from last year. Germany’s sugar industry association WVZ said on Tuesday that their nation’s refined sugar production from beets in 2024/25 is forecast to rise to about 4.64 million metric tons, up from 4.22 million in 2023/24 but down from their October forecast of 4.95 million.
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