COFFEE
March Coffee is higher this morning as the market retraces some of its losses after this week’s selloff from Friday’s all-time highs. The head of Colombia’s coffee federation said yesterday that the nation will likely yield 13.6 million bags in 2024, up 20% from 2023 due largely to improved pest controls and adaptations to climate change. Last year they produced 11.3 million bags. Colombian production in November reached 1.76 million bags, up 37% from the same month last year. Coffee traders in Vietnam told Reuters that about 30% of the (robusta) crop had been harvested. Cash trading in Vietnam has been quiet this week, but they indicated that beans could start to arrive in bulk in 10-15 days. Vietnamese farmers may have been reluctant to sell when London prices were as volatile as they have been. The trade is grappling with the possibility the 2025 Brazilian arabica production will struggle in the wake of the extreme drought earlier this year. Rains this fall allowed for active flowering, but the trees have reportedly struggled to establish fruit. The Brazilian real has stabilized at low levels following the collapse last week that may have encouraged producers and exports to sell.
COTTON
March Cotton is a bit higher this morning and is back approaching the 100-day moving average. Its failure to push above that line last week may have sparked the selloff on Monday. Traders will be looking to today’s weekly export sales report to see if the recent improvement in US cotton sales has continued. Last week’s report showed net sales of 324,072 bales for the week ending November 21, which was just below the previous week and was the second highest since January. Cumulative sales had reached 63% of the USDA forecast for the 2023/24 marketing year versus a five-year average of 71% for this point in the season. The slower than average pace could eventually pressure the USDA into lowering their forecast for the marketing year, but another strong number today could support a move through last week’s high. The dollar has backed since putting in a two-year high in November high, and this may have at least stabilized US competitiveness on the global market. Global cotton buyer may also be anxious to get deals done ahead of the threatened US tariffs and the potential retaliation, particularly from China or Mexico, which are among the biggest importers of US cotton.
COCOA
March Cocoa broke through Monday’s high overnight and traded to new contract highs. The nearby (December) contract, which goes off the board next Friday, has yet to push through last week’s high, but once it does so, it will reach its highest level since September, when it nudged above $10,000. The trade is concerned that the West African main crop will not be sufficient to make up for tight global supply after three years of global supply deficits. This crop started out strong, but heavy rains in October raised concerns about pod damage, and the seasonably dry conditions since have lowered some growers’ expectations. Ivory Coast arrivals are running about 34% above year ago levels but only 0.7% above the five year average.
SUGAR
March Sugar is lower this morning and is approaching Monday’s nine-week low. Recent rainfall in Center-South Brazil may have been too late to save their coffee crop, but it could benefit cane that was damaged by last year’s drought. The sugar market failed to get much traction from some bullish production reports out of Brazil last week. Reuters reported overnight that sugar prices in India fell to their lowest level in 1 ½ years due to ample supply. This has made mills reluctant to pay farmers the official cane price as sugar prices have fallen below the cost of production. Sugar demand has also decreased now that the festival season has passed. As of Monday, Indian mills had produced 2.79 million metric tons of sugar since the current season began on October 1, down 35% from a year ago.
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