FND Thursday, Talk of Large Brazil Delivery

SUGAR

July Sugar saw heavy selling yesterday after the market failed to push through a couple of key resistance areas last week. The UNICA report on Brazilian Center-South sugar production for the first half of April should be out this week. It would normally be released before the end of the month, which would leave tomorrow as a likely candidate for the release. This will be the first official report for 2025/26. As of March 31, the final report for 2024/25, total production for the marketing year was 40.169 million metric tons, down from 42.423 million in 2023/24. Production for the second half of March totaled 201,000 tons, up from 183,000 the same period a year ago. Last year, first-half April production totaled 721,807 tons. The five-year average for the period is 599,866. Last year, production got off to a fast start because there was a lot of cane leftover in the fields from the previous season. First notice day for the expiring May contract is on Thursday, and there has been talk that there could be a large delivery from Brazil.

COTTON

The cotton market sold off yesterday and extended its declines overnight. Recent rainfall in West Texas have improved the prospect for getting the crop in the ground in a timely manner. The weekly Crop Progress report released yesterday afternoon showed 15% of the US cotton crop was planted as of April 27, up from 11% the previous week and 14% a year ago. The 5-year average for this date is 14%. Texas was 21% planted, up from 16% last week and 18% a year ago. The 5-year average is 18%. Other important states are behind, especially in the Delta, where heavy rains and excessive moisture have slowed progress. Arkansas was 6% planted versus 13% a year ago and a five-year average of 7%. Mississippi was 4% planted versus 10% a year ago and an average  of 6%. Georgia is also behind at 6% planted versus 9% a year ago and a five-year average of 8%. The trade would also like to see progress on tariff discussions with Vietnam, Pakistan, and China, three of the US’ biggest cotton buyers.

COFFEE

July Coffee pushed thought the February contract high overnight, as the market continues to draw buyers on concerns over Brazil’s upcoming arabica crop. An historic drought last year and the fact that this is an off year in crop’s biennial cycle had already lowered expectations, and dry conditions earlier this year compounded those concerns. Brazil’s  growing regions saw better rainfall over the past couple of weeks, but World Weather Service looks for much less precipitation Thursday and through next week that would result in net drying of soils. Last week, Rabobank forecast Brazil’s 2025 coffee production at 62.8 million bags, down 6.4% from last year and down from a Safras & Mercado forecast for 65-66 million the previous week. Also last week, Nestle commented that prices increase in the coffee and cocoa-related categories had been implement with “limited customer disruption,” and Commerzbank also said price increases had not appeared to have affected demand. ICE certified stocks increased 4,283 bags yesterday to 826,304, their highest since February 14. Stocks have increased for seven sessions straight.

COCOA

July Cocoa is higher this morning following yesterday’s selloff. Recent abundant rainfall in West Africa is viewed as beneficial for the crop later this summer, but there is some question whether it came in time to help the early part of the mid-crop, which normally starts to arrive in May. World Weather Service said the rains over the weekend should have been sufficient to bolster soil moisture in many areas. They expect showers and thunderstorms to occur daily through the next week. Reuters estimated that Ivory Coast arrivals totaled 25,000 metric tons for the week ended Sunday, up from 23,000 the previous week 17,000 for the same week a year ago. The five year average for the week is 36,000. Cumulative arrivals for 2024/25 have reached 1.505 million tons, up from 1.354 million at this time last year but down from the five-year average of 1.740 million. Traders will be watching earnings reports from Mondelez and Hershey this week to get a read on demand. A recent disappointing sales report from Barry Callebaut pressured the market on ideas that demand had been severely damaged by high prices, but better than expected first quarter grind data from Europe, Asia and North America sparked a rally. ICE certified stocks increased by 224,772 bags yesterday to 1.987 million, their highest since October 14. Stocks have increased in 15 out of the last 16 sessions.

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