Ivory Coast June Grind Dwn 26% From LY

COCOA

News yesterday that the Ivory Coast cocoa grind fell 25.9% year on year in June to 45,172 tons countered the bullish news of Europe’s strong second-quarter grind from last week. Ivory Coast’s total grind since the year began in October was 468,831 tons as of June 30, down 13.3% from the same period last year. They have a total capacity of 712,000 tons/year. Origin grinding seems to have taken a back seat to Europe (and North America) this year, which is the opposite of the trends of recent years when Ivory Coast and others were building up their domestic processing capabilities. The lower grind might be viewed as an indication of lower demand, but in this case, it looks like a case of smaller supply. Second quarter grind for North America and Asia are expected on Thursday. Periodic showers and thunderstorms are expected in cocoa production areas in Ghana and Ivory Coast through the next week to ten days. Most of the region is expected to receive at least some rain, but it could be on the light side. Growers in Ivory Coast have been mostly upbeat on the mix of rain and sunshine over the past couple of weeks, saying conditions are good for pod development. Ghana’s 2023/24 cocoa production reached 429,323 metric tons as harvest neared completion at the end of June. This was less than 55% of the average seasonal output. Like Ivory Coast, Ghana’s output has been hit by adverse weather and  tree disease this past year, as well as by the impacts of informal mining and smuggling.

COFFEE

Supply concerns provide underlying support to the coffee market, but the near-record net long held by the funds is a concern for the bulls. Vietnam had experienced hot and dry conditions until recently, but they are expected to get good rainfall through next week. The trouble is, this may not help ease robusta supply shortages until harvest in the fall.  Dry weather remains a concern for Brazil, and there does not appear to be any relief in sight. This is helping the harvest move along at a rapid pace, but growers are complaining about small bean size due to the dry conditions this year. Warm temperatures and little to no rain are expected during the next ten days to two weeks. There is no threat of damaging cold through the end of the month. In Vietnam, the Central Highlands and other minor growing areas are forecast to see regular rounds of showers and thunderstorms through the next week, with light to locally moderate rain and some occasionally heavy, which should be favorable to coffee development.  ICE arabica stocks fell 1,620 bags yesterday to 801,5477, their lowest since June 11. Stocks have declined for the past seven sessions.

COTTON

The large net short held by funds has limited selling in the cotton market, and it begs the question if the market fell too low for this early in the growing season when it recovered off the 70-cent level in June and again last week. US and world ending stocks are expected to climb to their highest levels in five years, provided the weather cooperates (which seems to be happening). There have been areas of drought in the southeast US and west Texas, but rain this week and next is expected to provide relief. The Delta and the Southeast are forecast to see showers and thunderstorms today through next Wednesday, and more showers are expected the following week. West Texas is expected to see scattered showers through next Thursday before drier weather returns through the end of the month. A lack of significant heat over the next seven days will slow drying, but warmer temps could return the following week, and more rain will be needed. The NWS 6-10 and 8-14 day forecasts call for above average chances of rain across the entire cotton belt, with normal to below normal temps from west Texas to Georgia. The monsoon revival in India has growers actively planting summer-sown crops, including cotton.

SUGAR

Center South Brazil finally received some rain last week, but dry conditions are expected to return though the end of the month. The region’s sugar production since the season began in April has been strong, helped along by dry conditions that were conducive to harvest. Industry analysts have been warning that these same dry conditions will eventually pull production down, but so far that has not happened. The recent UNICA report showed Brazilian Center-South sugar production for the second half of June was the strongest so far this season. The recent revival of the Indian Monsoon is seen as beneficial for their crop. Thailand is receiving decent rain this season after their poor crop last year. Above average rainfall this season has allowed soil moisture to return to near-normal levels.

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