USDA Lowers Brazil 2024/25 Coffee Production

COCOA

March Cocoa is hovering around last week’s seven month high at 8783 this morning and a successful test of that level could spark a move to the contract high at 8984. Yesterday it was reported that cocoa consultancies TRS and CRA had dropped their expected surplus forecasts for 2024/25 due to adverse weather in West Africa and Ecuador. Ghana’s graded and sealed cocoa arrivals reached 182,397 metric tons as of November 7 (since the start of the harvest on September 11), up 49% from 122,699 for the same period last year. Their total production is expected to reach 650,000 tons this season, which would mark a recovery from 450,000 last year. Ivory Coast and Ghana had no rainfall recorded in the last 24 hours. The dry season appears to have arrived. This will ease concerns about disease, but it could also reduce production for the balance of the main crop. Growers had been expecting two strong crops per month from October through December, but that has been thrown into question by excessive rains in October and recent concerns that conditions may turn dry very quickly. There is also uncertainty about whether the EU will postpone the deforestation plan that requires importers of agricultural commodities to provide verification that the product did not come from deforested areas.

 

COFFEE

USDA Lowers Brazilian 2024/25 Production

May Coffee trade to another new contract high overnight, with nearby prices reaching their highest level since May 2013. Traders reported that Brazilian farmers have already sold much of their crop, which allows them to be patient. The trade has concerns about the upcoming 2025/26 crop, which had decent flowering after the rains finally arrived last month, but may see a short crop because trees are stressed by this year’s drought. It will also be the “off-year” in the arabica crop’s biennial cycle. Domestic prices in Vietnam were higher last week on stronger demand and limited supplies despite harvest reaching peak levels. World Weather Service says Brazil could see some increased rain today through Saturday, followed by restricted rains into Wednesday of next week. Indonesia will see routinely occurring rainfall, which is good for production. Vietnam’s rainfall will be mostly confined to coastal areas, which should allow harvest to proceed.

In a report yesterday, the USDA attaché put Brazilian 2024/25 coffee output at 66.4 million bags, down from the official USDA estimate of 69.9 million from earlier this year and only slightly higher than the 66.3 million estimated for 2023/24. Arabica production was estimated at 45.4 million, down from the official estimate of 48.2 million but up from 44.9 million last year. Robusta production was estimated at 21.0 million bags, down from 21.7 million previously and down from 21.4 million last year. Drought and high temperatures earlier this year have pulled production lower than previously forecast. The 2024/25 season was the “on-year” in the cycle for arabica coffee, which helped keep this year’s production above last year in the face of adverse weather. Brazil’s coffee, both arabica and robusta, was in high demand  this year due to the poor robusta crop in Vietnam.

The USDA attaché in Colombia raised their 2024/25 production forecast to 12.9 million bags (all arabica) from the official forecast of 12.4 million. The 2023/24 estimate was increased to 12.76 million from 12.2 million previously and up from 10.7 million in 2022/23. USDA credits decent weather and widespread application of “improved cultivation practices.”

 

coffee spilling from cup

 

COTTON

March Cotton was higher overnight for the third straight session as the market tried to extend its technical recovery bounce. The dollar was higher overnight, which is a bit negative to cotton, but the market could be seeing some modest support from higher oil prices. Bullish traders will be hoping that today’s weekly export sales report recover this week after last week’s disappointment. Last week’s export sales report showed the US sold 154,284 bales for the week ending November 7, down from 229,039 the previous week and the lowest since October 3. This broke a four week trend of modestly increasing sales. As of last week, cumulative sales for 2024/25 were only 6.046 million bales versus 7.262 million a year ago and 8.801 million the year before that. They were lowest for this point in season since 2015/16. Sales had reached 72% of the USDA’s forecast versus a five-year average of 69%. A wetter trend emerging in dryland areas of Australia should benefit planting and establishment.

 

SUGAR

March Sugar is lower this morning for the second straight session after failing to break through a downward channel earlier this week. Yesterday, the International Sugar Organization lowered it its projected global supply deficit for 2024/25 to 2.51 million metric tons from 3.58 million in a previous forecast. They also changed the 2023/24 setup from a modest a deficit of 200,000 tons to a surplus of 1.31 million. They revised 2024/25 consumption down to 181.58 million tons from 182.87 million previously, and they lowered 2023/24 consumption down to 108.05 million from 181.46 million previously. Global production for 2024/25 was lowered to 179.07 million tons from 179.29 million previously. This is down from the record 181.37 million for 2023/24.

 

 

 

 

 

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