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March Cotton Unchanged


March cotton was close to unchanged overnight after trading to limit-up on Thursday and reaching its highest level since November 1. The market was apparently buoyed by optimism regarding US export prospects, and it probably turned cautious overnight ahead of today’s USDA supply/demand update. Cumulative sales for 2023/24 have reached 7.918 million bales, down from 8.734 million a year ago and the lowest for this point in the marketing year since 2016/17. However, the amount of cotton physically exported for the week was 136,156 bales, which was the highest since September 28. The largest buyer this week was China at 59,145 bales. The strong exports number and the fact that China reemerged as a buyer were viewed as supportive. The trade is not looking for many changes in today’s USDA reports.

cotton bolle


March sugar prices have fallen 19% from their contract high in early November and 15% since November 29, which puts the market in a short-term oversold condition. Brazil’s record production and indications that their shipping bottlenecks have eased suggest that tight global supplies are starting to loosen up. Sucden analyst Olivier Crassard said he does not expect India to export this season, but previous expectations that they would have to import have been reduced with their move this week to limit ethanol production. India’s sugar cane production is expected to fall 12% to roughly 382.6 million tonnes in 2023/24 from 434.8 million in 2022/23, according to the nation’s food secretary. Thailand’s production is expected to fall sharply this year due to drought conditions this summer, and El Nino could bring more warm and dry conditions to the region through the Northern Hemisphere winter. A cyclone is headed for Queensland, Australia, which is that nation’s top sugar producing region. The cane harvest is almost complete, but there are a few regions behind schedule that could be affected by the storm.


A loss of upside momentum, Brazil’s strong crop, and the possibility that ICE coffee stocks have bottomed suggest the coffee market has put in a high. Last week it was reported that Brazil’s coffee exports in November were 8.5% higher than last year, which was evidence that the port delays had eased. ICE exchange coffee stocks were unchanged on Thursday, which was the first day without an increase since Monday, but there are more than 20,000 bags pending review. Stock levels fell sharply at the end of November with the approach of a change in the delivery rules, and that decline was behind the rally to 5 1/2 month highs on December 1st. Now that the rule has gone into effect, stocks are gradually increasing. And despite some extreme heat that that has raised concerns about Brazil’s 2024/25 Arabica crop, private analysts are calling for production to increase 6%-8% (and in some cases 11%). Colombian production is showing progress in its recovery from two La Nina events, with November production up 25% from last year. Mercon Coffee Group, one of the world’s largest coffee traders, has filed for bankruptcy protection in the US, according to Reuters. They have operations in all the major producing regions, including Brazil, Vietnam, and Central America. Court documents indicate a total debt of $363 million. The trend in coffee is still up, but momentum indicators are lagging. If global risk sentiment turns negative following today’s US jobs report, it could weaken coffee’s out-of-home demand prospects.


News yesterday that Ghana’s cocoa arrivals for the 2023/24 season had dropped roughly 51% from year ago levels as of November 23 sparked a gap higher open in March cocoa yesterday, but the market’s subsequent failure to make a run the contract highs suggests some level of exhaustion on the part of the bulls. March cocoa set back overnight and moved back into yesterday’s gap. It has seen its biggest setback since September this month after trading to a 46-year high on November 30. There have been reports of improvements in west African production, but Ivory Coast arrivals as of Sunday were 35% behind a year ago, and the Ghana news this week compounds the production worries. There is a consensus that cocoa will see a third global production deficit in a row this season, with Rabobank estimating that the deficit will be 160,000 tonnes. Traders are awaiting the arrival of west Africa’s dry season, which will slow production dramatically. They will pay close attention to severity of the Harmattan winds that blow down from the Sahara.


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