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Cotton Shows Moderate Gains


With near-term demand concerns soothed by stronger global risk sentiment, cotton prices are on-track for their second “up” day of January. March cotton was unable to hold onto early strength as it posted a sizable loss Wednesday, but it has shaken off early pressure and is showing moderate gains early in today’s action. China has been the largest importer of US cotton over the past few weeks, so today’s rebound in Chinese equity markets has provided support to cotton prices this morning. Today’s USDA’s weekly export sales report is likely to come in well below the last “pre-holiday” report at 372,497 bales. Last week’s report had sales at 131,063 bales and covered both the Christmas and Boxing Day holidays. Today’s report will only cover the New Year’s Day holiday and may also reflect fresh export business. The Brazilian government agency Conab increased their nation’s 2023/24 cotton production estimate from 3.061 million up to 3.099 million tonnes. That is lower than the 3.173 million tonnes during the 2022/23 season.

single cotton pod


The coffee market continues to hold above the 50-day moving average and should benefit from stronger global risk sentiment early today. Updated weather forecasts have Brazil’s major Arabica growing regions having rain in the forecast for all but one day through late next week, and that has pressured coffee prices this week as that should benefit Brazil’s 2024/25 Arabica crop. The USDA has forecast the top 5 Arabica-growing nations to have a combined production increase of 8.55 million bags during the 2023/24 season. As a result, this could weigh on coffee prices as it could start to offset support from the supply issues seen in major Robusta growing areas.


Cocoa prices fully recovered from Monday’s 170-point downdraft (or -4%) in only two sessions and they are now on-track for a positive weekly reversal from an 8-week low. The market will have to get past critical inflation data later today, however, and that will leave cocoa prices vulnerable to a near-term pullback. The BMI unit of Fitch Solutions forecast cocoa having a 2023/24 global production deficit of 170,000 tonnes versus a deficit of 90,000 tonnes in 2022/23. Ivory Coast and Ghana production disruptions from drier than normal weather contribute to yearly deficit increase. A group of major Ivory Coast cocoa processors said that their December grindings came in at 62,682 tonnes, which was 7% above last year’s 58,554 tonnes. Ivory Coast is now the world largest cocoa grinding nation with the International Cocoa Organization estimating their 2022/23 grindings total at 770,000 tonnes (15.4% of the world total).


While sugar is still on course for a second positive weekly result in a row, the results of Unica’s supply report on Brazil’s Center-South for the second half December will be the main diver of market direction. The report is due out today at 8AM CST. From the start of April through the first half of December, Center-South sugar production was 41.746 million tonnes which was 25.16% ahead of last season’s 33.354 million tonnes. Over the same timeframe, the Center-South cane crush came in at 638.391 million tonnes which was 18.29% ahead of last season’s 539.683 million tonnes. This morning’s report should show Brazil’s Center-South sugar production staying on a record high sugar production pace. Sugar’s share of Center-South crushing from April through mid-December has been 49.14%, which compares with a 45.95% share over the same timeframe last season. Weather issues in Australia and Thailand should lead to lower upcoming sugar production from both nations which should continue to lend support to prices.


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