Sugar Fell to Lowest Level Since March

COCOA

December Cocoa was lower overnight after yesterday’s reversal higher. The market remains in a mostly sideways pattern, as tight near term supplies are offset by expectations of a much improved main crop in west Africa. Rain is expected to be on the light side in key cocoa growing regions over the next couple of weeks but then return later this month. Ivory Coast farmers interviewed by Reuters said that most of the main crop looks promising. Good rain amounts will help fill pods, but without intermittent sunshine, black pod disease can develop. But unlike last year, there have been no complaints of too much rain this summer. Ivory Coast cocoa arrivals were approximately 13,000 metric tons last week, up from 9,000 for the same period last year. Cumulative arrivals for 2023/24 have reached 1.668 million tons, down 26.8% for the same period last year.

COFFEE

September Coffee gapped higher overnight and traded to its highest level since July 24 after Brazil’s largest coffee exporter/co-op, Cooxupe, said it now expects a decline in production in 2024 in areas where it operates. The co-op’s president said on Monday that with the harvest nearly complete, it now seems that its associated farmers will deliver a smaller amount of coffee than in 2023. They had originally expected to receive about 7 million bags from their growers this year, which would have been a 7.7% increase over 2023. He also stated that it is too early to have a good idea of 2025 production but he remarked that the weather remains dry. ICE arabica stocks fell 4,775 bags yesterday to 825,319.

COTTON

December cotton saw choppy, two-sided trade overnight after falling to new contract lows yesterday. The Weekly Crop Progress report, which was released after the close yesterday, showed 45% of the US cotton crop was rated good/excellent as of August 4, down from 49% the previous week. This was up from 41% a year ago but below the five-year average of 47%. Texas was 32% G/E, down from 40% last week and 46% two weeks ago. This was still up from 17% a year ago but was below five-year average of 34%. It was the lowest Texas’ conditions have been all year. The weather may not allow for much improvement over the next couple of weeks. The 1-5 day forecast has little rain for Texas nor the Delta. The 6-10-day forecast has below normal chances of rain in west Texas with much above normal temperatures, and the Delta has an even drier forecast. Tropical Storm Debby could bring “catastrophic flooding” to portions of eastern, Georgia but the worst of it looks like it will miss the most important cotton growing areas. Declining crop conditions and the drier trends for Texas and the Delta may leave an inkling of concern about the crop. December Cotton sold off yesterday on weaker equity and  oil markets, but it did not collapse.

SUGAR

October Sugar fell to its lowest level since March yesterday, largely on pressure from the selloffs in equities and crude oil, but it bounced off its lows and was near unchanged overnight. The market has already seen three days of heavy selling going into yesterday, as improved rainfall for Thailand and India offset concerns about dry conditions in Brazil. The weather in Brazil looks mostly dry for at least another 10 days, which has the potential to reduce cane yields there. Brazilian production fell behind last year in the first half of July, and the trade will be anxious to see how the second half fared in the semi-monthly Unica report, which will likely be released next week.

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