USDA Supply/Demand Bullish Cotton

COCOA

December Cocoa was higher overnight following a selloff yesterday after trading to the top of a six-week trading range on Friday. The market is drawing support from tight global supplies, but the anticipation of a stronger crop this year is seems to be limiting the gains. Ivory Coast farmers interviewed by Reuters reported good growing conditions, and they said that the below average rainfall last week was beneficial to the crop, which needs periods of rain and sun. They said the trees are carrying a mixture of flowers and small, average, and large pods, which suggests that main-crop harvest would be strong until at least December. Almost-ripe, big pods are expected to be harvested starting in September, and there is already some harvest occurring. Ivory Coast port arrivals were estimated at 11,000 metric tons for the week ending August 11, down from 13,000 the previous week but up from 7,000 for the same week last year. Cumulative arrivals since October 2023 have reached 1.679 million tons, down 26.5% from the same period last year.

COFFEE

December Coffee was sharply lower overnight after a big rally yesterday off reports of frost in some coffee growing areas of Brazil. Farmers reported the occurrence of light frosts in the early hours of Sunday. World Weather Service said patches of soft frost occurred Sunday in Sul de Minas near the Sao Paulo border, but they believe the impact was low. Some leaf mass injury likely occurred, but temperatures were not low enough for long enough to induce any threat to 2024/25 blossom buds. They do say unusually cold air will occur up into coffee areas through Wednesday morning. They expect temperatures this morning to be cold enough for some frost today and possibly tomorrow morning but that hard freezes remain unlikely in key production areas. Temperatures after Wednesday will then return to being above normal. The cold snap has added to concerns that the dry conditions this year have lowered prospects for 2024/25 production. Another firm lowered its forecast for Brazil’s crop by 2.5 million bags yesterday. ICE arabica stocks fell 7,777 bags yesterday to 820,732, their lowest since July 31 and their biggest one-day drop since July 5. The biggest declines came from Central America-origin supplies, with Honduran down 3,607 and Nicaraguan down 3,600. Brazil-origin stocks fell 570.

COTTON

December Cotton saw a sharp rally yesterday in the wake of a bullish USDA supply/demand report, but it gave back much of the gains by the close of the day and was lower overnight. USDA tightened 2024/25 US and world ending stocks in yesterday’s report, but they were still relatively ample. The report showed US and world cotton production and ending stocks all coming in below the low end of expectations. US planted area and yield were both revised down. The Crop Progress Report released late yesterday showed a 1% improvement in good/excellent readings last week.

The report showed US 2024/25 cotton production at 15.11 million bales, down from 17.00 million last month. Planted area was revised down to 11.17 million acres from 11.67 million last month, and yield was revised down to 840 pounds per harvested acre from 844 last month. Exports were revised down to 12.00 million bales from 13.00 million last month. This put ending stocks at 4.50 million bales, down from 5.30 million in July but  up from 3.15 million in 2023/24 and the highest since 2019/20, when they reached 7.25 million. The stocks/use ratio was 32.4% versus 35.6% estimated last month and the highest in since 2019/20, when it was 41.0%.

World production for 2024/25 came in at 117.64 million bales, down from 120.19 million estimated last month and 113.58 million for 2023/24. This is the highest since 2019/20, when world production reached 118.53 million. World ending stocks fell to 77.61 million bales from 82.63 million last month, but they are the highest since 2019/20, when they reached 83.39 million. The reduction in ending stocks was partly attributed to revisions lower in Chinese production between 2015/16 and 2021/22, which lowered beginning stocks for 2024/25 by 3.53 million bales from last month’s report.

The Crop Progress released  yesterday afternoon showed 46% of the US cotton crop was rated good/excellent as of August 11, up from 45% the previous week and 36% a year ago but below the five-year average of 46%.

SUGAR

October Sugar has been trading in a relatively narrow range for the past few sessions as it awaits the release of the UNICA update on Brazilian production for the second half of July. The previous report showed first-half July Center South sugar production at 2.939 million tons, down 9.7% from last year and down from 3.247 million in the second half of June. A survey by S&P Global Commodity Insights had a median forecast for second half of July at 3.6 million tons, which would be down 2.4% from a year ago but up from the first half. The extended dry period this spring is expected to eventually pull production down. As of July 16, cumulative production was running 10.4% ahead of a year ago. There was a another chance of frost this morning, but it is not expected to be cold enough for a long enough period to damage to cane crops. The bigger concern remains the dry conditions. Areas in the southern part of the Center-South region (Sao Paolo) have seen some rainfall over the past seven days. None was reported overnight. The USDA supply/demand report yesterday put US sugar production for 2024/25 at a record 9.51 million short tons, with farmers and processors reporting good yield for sugarcane and beets.

Interested in more futures markets?  Explore our Market Dashboards here.