NY Coffee Continues Drift Lower

COCOA

December Cocoa fell back to the bottom of a three week trading range overnight. Weather in Ivory Coast and Ghana remains decent, with no alarming trend of too wet or too dry showing up in the reports. World Weather Service reports that West Africa rainfall has shifted to the north as it often does in July and that cocoa production areas should see less frequent and less significant rain in the south. A mix of rain and sunshine is viewed as beneficial for the main crop, which begins harvest this fall. Last year’s problems started when it stayed too wet. A study done by George Washington University found that heavy metal in most chocolates may not pose a health risk, that 70 of 72 cocoa-containing products they analyzed fell below limits set by the FDA for lead contamination.

COFFEE

September NY Coffee continues to drift lower from its July 11 high, with traders blaming the advancing harvest in Brazil, which is now more than 80% complete. Dry conditions this year continue to cause concerns about the overall state of the crop, however. An agronomist at Cooxupe, Brazil’s largest coffee co-op, said yesterday that the 2025 coffee crop could suffer “considerable losses” if weather conditions remain unfavorable to coffee trees. Most crops have not seen rain for more than 120 days, and soil moisture is approaching critical levels in the main producing areas of South Minas Gerais and Cerrado Mineiro. Some light rains have fallen in eastern growing areas. Vietnam rainfall is expected to remain below normal for the next two weeks, but coffee conditions look good for the most part, and World Weather Service says and the odds are favorable that timely rain of greater significance will resume in August.  ICE arabica stocks fell 6,184 bags yesterday to 814,924, which was the lowest since July 17 but up from 807,394 at the end of June. Stocks of Brazil-origin fell by 6,060 bags to 406,921. The drop in ICE stocks shows some commercial interest. The ongoing dry conditions in Brazil are a concern for the upcoming crop, but the advancing harvest is pressuring the market.

COTTON

It is possible December Cotton has found support on a less than ideal weather outlook for the US crop. World Weather Service expects the US Delta to experience net drying conditions over the next ten days, with the hottest being early this weekend. Crop stress is possible, and significant rain will be needed by this time next week. Very warm to hot temperatures in the southern Plains could deplete soil moisture and stress unirrigated areas. US crop conditions fell back last week after a sharp jump the previous week, and this has left the market a bit more focused on the weather. The India Meteorological Department says La Nina, which is expected to arrive in late August or early September, could bring above average rainfall to their nation. They look for average rainfall in August and above average in September. They also warned that some key cotton growing areas could see below normal rainfall in August. The 2023/24 marketing year for US cotton ended yesterday, and the penultimate export sales report will be released today. Last week’s report showed net cancellations of 74,207 bales for the 2023/24 (current) crop and net sales of 285,874 for 2024/25 for an overall net sale of 211,667 for the week ending July 18. As of last week there were 2.716 million bales of outstanding sales (sold but not shipped) versus 2.476 million a year ago and a five-year average of 3.961 million. Outstanding sales represent 21.2% of total commitments versus 18.4% last year ago and a five-year average of 17.3%.

SUGAR

October sugar was higher overnight but stayed inside yesterday’s range. Weather trends and production data have turned somewhat bullish over the past week or so. La Nina may bring above average rainfall to India in September, but some cane areas may see below average rainfall in August, according to the India Meteorological Department. The nation saw 9% above average rainfall in July, but an Indian industry group said this week that it expects a drop in production this year due to lower plantings. Rainfall in Thailand’s western and interior southern regions is expected to remain below normal over the next two weeks, which could also become a focus because the trade is counting on a recovery in that nation’s output this year. Up until now, strong monsoon rainfall in India and Thailand have boosted expectations for their cane crops. Concerns remain about the dry weather in Brazil. Center South production showed a decline in the first half of July, and news of that has already sparked a 1.46-cent rally off the July 24 low.

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