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Sept Coffee Continues to Chop Around


Mid-Crop Outlook Improving

Recent rains in West Africa have improved the outlook for the later this summer, but the market is still dealing with tight supplies. Cocoa farmers in Ivory Coast told Reuters on Monday that the rain last week bodes well for the a strong finish to the mid-crop. They noted that plenty of small and average sized pods on trees would ensure abundant harvest, provided the weather remains good in July. Adequate sun is also necessary. Last summer, too much rain and not enough sun caused black pod and swollen shoot disease, which affected the main crop and which ultimately lead to the move to all-time highs this year. Cocoa arrivals at Ivory Coast ports totaled 25,000 metric tons last week, down from 30,000 for the same week last year. Total arrivals since the marketing year began on October 1 have reached 1.562 million tons, down 27.9% from a year ago. Ghana’s cocoa marketing board, Cocobod, said it will start purchasing the light crop on Friday (comparable to Ivory Coast’s mid-crop). The light crop is typically used by domestic grinders, while the main crop is exported. Ghana expects their production to be 40% below target this season. Ivory Coast’s cocoa grind in May totaled 43,628 tons, down 30% from the same period last year. Total grind since the season began in October has reached 423,659 tons, down 11.7% from last year. West Africa is looking at above normal rainfall over the next 15 days but not an extreme. Indonesia is slightly below normal.



Brazil Harvest 37% Complete

September Coffee continues to chop around inside a three week-old range. ICE exchange stocks reached 821,091 bags yesterday, up 6,060 from Friday and up 22,053 for the week. Stocks have either increased or held steady for 10 straight sessions, and this build could indicate slack demand and/or ample supply. Safras and Mercado reported that Brazil’s 2024/25 harvest was 37% complete as of last Tuesday versus 33% for the same period last year. Sales were 22% versus 26% for this time last year. Somar Meteorologia reported that Minas Gerais had no rain over the past week versus an average of 7.9 millimeters (range 0.31 mm), which helps advance the harvest. The Brazilian real came close to taking out last week’s five-month low yesterday, which increases the incentive for roasters to market their product for export. Rains have returned to Vietnam, but there are concerns that they are too late to reverse the damage done by drought earlier this year. There are reports that Indonesia’s harvest is getting off to a strong start. The expected arrival of La Niña in July-September could bring less moisture and colder than normal temperatures to coffee growing areas of Brazil, increasing the chance of frost.



Crop Conditions Slightly Lower

December Cotton fell to its lowest level in 3 ½ years yesterday but it closed well off the lows of the day, which could spark talk of a potential low. The market is lower this morning, but it is holding above yesterday’s low (so far). The Weekly Crop Progress report showed  54% of the US cotton crop was rated good/excellent as of Sunday. This was down from 56% last week but up from 47% a year ago. Texas was rated 43% good/excellent versus 44% last week and 30% a year ago. Two weeks ago they were 53% G/E. Georgia was 59% good/excellent, unchanged from last week and last year but below the 10-year average of 64%. The crop was 90% planted as of Sunday versus 87% a year ago and a five-year average of 91%. 22% of the crop was squaring versus 17% a year ago and 18% on average. The Dollar Index traded to its highest level since May 1 last week, which makes US cotton less competitive on the word market. First notice day is next Monday, and as of Friday there were still 15,000+ contracts open, which leaves the market vulnerable to long liquidation. A tropical storm forming over the Gulf of Mexico could bring heavy rains to Texas this week, which could also be beneficial to the crop, but there is a threat of flooding in the Coastal Bend region. The 6-10- and 8-14-day forecasts call for above normal rainfall across the US cotton belt and above normal temperatures as well.


Trade Expects Brazil Production to Recover in June

October Sugar fell sharply yesterday, as the trade apparently expects Brazilian production to recover in June after its poor performance in May relative to last year. The lower than expected May output was blamed on processors crushing older, lower-quality  cane. The trade expects the sugar mix (amount of cane juice) to improve as processors start crushing more newly mature cane this month. Over the weekend, Czarnikow forecast a 5.5 million-ton surplus in 2024/25, crediting higher production out of Thailand, the European Union and Brazil. The Brazilian real came close to taking out last week’s five-month low yesterday, which increases the pressure on growers to market their product for export. India’s monsoon has produced 20% less than normal rainfall so far this season, which is starting to become worrisome to growers. The Indian weather department had been expecting above average rainfall this year with the departure of El Niño, and the monsoon did arrive a few days early. La Niña could also boost rain amounts if it arrives later this summer as expected.



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