Cotton Crop Is Steady But Still Poor

COTTON

December cotton was slightly lower overnight after the weekly crop progress reports showed little change in US cotton crop conditions. The market has a double-top around 90.00 as demand concerns have been the offsetting factor against expectations that the US crop production estimates will be lowered in upcoming reports. The weekly Crop Progress report showed 30% of the US cotton crop was rated good/excellent as of Sunday. The record low was 29% from 2011. Conditions have held steady for three weeks. Rainfall in the Panhandle and western parts of West Texas could delay harvest and discolor cotton with open bolls. The crop progress report had few surprises, but it did confirm that the US crop has some of the poorest conditions on record, which has traders anticipating further reductions in US production forecasts in upcoming supply/demand reports. However, US export sales are the slowest since 2016/17, which could mitigate the drop in production, to some degree.

SUGAR

Sugar’s rebound appears to have run out of steam, and the market is within striking distance of a 4-week low. A setback in crude oil this week and ongoing weakness in gasoline are pulling remaining support from the market. The Brazilian real took out last week’s three-month lows yesterday, which increases the incentive for Brazilian mills to market their sugar for export. An uptick in India’s rainfall over the past few weeks has weighed on sugar prices on ideas it will benefit late-harvested cane. India’s monsoon rainfall this year was the lowest since 2018. The India Meteorological Department said rainfall during June through September was 6% below the long period average versus a 4% decline expected at the start of the season, but good rainfall in September helped rain totals recover from a disastrous August, and the monsoon’s late departure is expected to bring decent rain amounts this week.

COFFEE

December coffee may be attempting to establish another temporary low after falling to its lowest level since January late last week. ICE exchange coffee stocks were unchanged on Monday, but they finished September with an eighth monthly decline in a row and were less than 1,100 bags away from making a new 11-month low. Colombia’s production has shown little improvement since La Nina ended earlier this year, and that has also underpinned prices. Honduran coffee exports citing adverse weather and limits on fertilizer supplies due to higher costs, according to the national coffee institute IHCAFE. Honduras is Central  America’s top coffee grower and the fifth-biggest exporter globally.

COCOA

After two weeks of heavy losses, cocoa is showing signs of a that hit has put in a low. Long term fundamentals point to tight supply, and the upcoming main crop in west Africa is threatened by disease and the potential for El Nino to bring dry conditions later this year. Some of the shortfall was due to cocoa beans being diverted to the domestic processing industry. After last season’s concern over cocoa being smuggled from Ghana to Ivory Coast, there is now concern that it will be smuggled from Ivory Coast to Ghana, as Ivory Coast’s 2023/24 main crop minimum farmgate price is roughly 18 cents per kilo lower than Ghana’s minimum purchase prices. Cocoa production is expanding into Brazil, Ecuador, and Colombia, according to a report from Reuters. Cocoa is native to the Amazon, so planting it is viewed as a form of “reforestation.” Plantations in South America tend to be much larger than in Africa, which consists of mostly small farmers. Brazil was once the second largest producer to Ivory Coast, but in the 1980’s, the fungus known as Witches’ Broom reduced output.

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