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Sugar Workers Suspend Strike Action


Sugar workers’ unions in Australia have temporarily suspended strike action at mills run by Wilmar Sugar, as negotiations over pay resume. Strikes have delayed the start of the crushing season, and there are concerns that this could lower Australia’s output this year. Unica is expected to release its update on Brazilian sugar for the second half of May any day, and a survey of analysts by S&P Global has expectations for Center-South production to be down 0.8% from a year ago at 2.9 million metric tons. Traders will be also be watching the sugar mix, as the last report showed only 48.3% of the cane crop processed for sugar versus expectations of 51.7%. For this report, the average expectation calls for 49.8%. Dry conditions are expected to continue in Center-South Brazil over the next two weeks. The top four sugar producing districts have lower than normal rainfall forecast over the next 15 days. Some moisture seems to be some of the other districts in the 11-15 day window.

sugar packets


Reversal action yesterday put September Coffee back inside a three-week consolidation range. Low US CPI readings left the door open for the US Fed to cut rates in September, which would be bullish for demand and for commodities in general. News that Brazil’s May coffee exports were up sharply over year ago levels were viewed as bearish initially, but it also confirmed that Brazil is capturing market share from Vietnam, whose exports are down sharply from last year. Minas Gerais, Brazil is showing lower than normal precipitation out through the next 10 days. Growers there have been complaining about small bean sizes. ICE exchange stocks totaled increased by 5,840 bags yesterday to 804,878, up 6,195 from the previous week.


News that Ghana is looking to roll 350,000 metric tons of pre-sold cocoa to the 2024/25 season, up from a previous expectation of 250,000, was enough to spark resumption of the rally in cocoa yesterday. Ghana apparently pre-sold 785,000 tons for 2023/24 but will likely only deliver 435,000. Their crop typically runs between 750,000 and 850,000, but it fell to 670,000 in 2022/23 and is not expected to climb above 500,000 in 2023/24. Ghana’s cocoa marketing board, COCOBOD hopes to see the nation’s production to rebound to 800,000 tons in 2024/25 with better weather prospects and rehabilitated cocoa farms. In a radio interview, the CEO of the board said the board had rehabilitated 68,000 hectares of diseased farms, of which 40,000 will be handed over to framers next month. Two sources told Reuters that Ghana has sold forward only 100,000 tons for the 2024/25 crop. Below average rainfall in Ivory Coast and Ghana this season continue to support the market. Open interest is less than half of what it was in January, and funds have been slow to get on board.


December Cotton is close to taking out this week’s 18-month low this morning, as decent US weather and slow export sales leave the bulls with little to cling to. The CPI reading yesterday was the softest since July 2022, which left open the possibility of a Fed cut in September, but that did not appear to offer much support to cotton. The USDA supply/demand report was slightly bearish against expectations but did not offer many surprises. The Acreage Report on June 28 will offer a better estimate on actual plantings. The report put US 2024/25 cotton production at 16.00 million bales, unchanged from last month and at the low end of expectations. US ending stocks came in at 4.10 million bales, up from 3.70 million last month and above the average expectation of 3.90 million. This was because 2023/24 exports were lowered by 500,000 bales, resulting in a likewise increase in beginning stocks for 2024/25. World ending stocks came in at 83.49 million bales versus 83.51 million expected and 83.01 million in the May update. This was up from for 80.48 million for 2023/24. The export sales report this morning may be the only hope to  avoid a resumption of the selling. Last week’s report showed net sales of 138,700 for the 2023/24 marketing year and 54,100 for 2024/25 for a total of 192,700 for the week ending May 30. This was the lowest since April 25. China bought just 73,891 bales. China has committed to 5.0 million bales for the current marketing year versus 3.6 million at this point a year ago. The forecasts call for above normal temperatures across the US cotton belt, with mostly normal or above normal chances of rain. The northeastern two-thirds of Georgia, the northeastern third of Alabama, and the Carolinas have lower than normal chances in the 6-10-day. West Texas have normal and above normal in the 6-10 and 8-14-day maps.


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