Wet Weather In Delta Could Damage More Crops

COCOA

December Cocoa was higher overnight and was approaching the upper end of the relatively narrow range of the past two weeks. The market has been steady recently as it has been awaiting the west African main crop. World Weather Service says that west-central Africa rainfall is expected to increase over the next couple of weeks, with some of the driest areas in southern Ivory Coast and southern Ghana getting some significant rain after a lengthy period of dryish weather. Traders may start to look more closely at the weekly Ivory Coast arrivals for an indication on harvest progress. Last week’s update showed total arrivals of 17,000 metric tons for the week ending September 17, which was the highest since mid-July. Growers may also be waiting for the Ivory Coast cocoa board to raise the official farmgate price before they bring their crops to market. The new marketing year begins on October 1. Friday’s Commitments of Traders Report showed managed money traders were net buyers of 2,922 contracts of cocoa for the week ending September 17, increasing their net long to 29,348. This is in the middle of the historic range.

COFFEE

December Coffee recovered overnight following Friday’s steep selloff. Perhaps the market had become overbought on the dry weather theme from Brazil, with the wetter forecast for this past weekend likely inducing the selling on Friday. Southern Minas Gerais did receive some rain over the weekend, with isolated areas receiving heavier amounts, but the northern parts stayed dry. Parana and Motto Grosso do Sul received heavier rainfall. World Weather Service said some flowering may be occurring, but the bulk of the crop region has not received enough to more than swell some blossom buds. Not much precipitation is expected over the major coffee areas into next week, but relative humidity will continue to increase, which is a very important step prior to the start of the rainy season. The next chance of any significant rain would be this weekend. Vietnam saw widespread rain over the weekend with moderate to heavy amounts in the Central Highlands. Some flooding was suspected. Daily rains are expected through the upcoming 7-10 days, but they should be lighter, which would be appreciated. Indonesia could see better moisture in the next 10 days, which would be appreciated by growers there. Last week, Conab lowered its forecast for Brazil’s 2024 coffee crop, which just recently completed harvesting. We are entering a critical development phase for the upcoming crop when rains are needed to induce flowering. Friday’s Commitments of Traders Report showed managed money traders were net buyers of 4,825 contracts of coffee for the week ending September 17, increasing their net long to 61,453.

COTTON

December Cotton was a bit higher overnight, but it held below Friday’s 2 ½ month high. A wetter than normal trend in the US Delta and southeastern states could slow the harvest and cause additional damage to the crops. World Weather Service says an upper-level low pressure system over the Delta and southeastern states will merge with a tropical cyclone that is expected to move out of the Caribbean to northwestern Florida later this week, eventually to the Tennessee River Basin and/or southeastern states. Areas could see significant rains of 1-4 inches, and a few areas where the tropical cyclone comes inland could see 4-10 inches. The rainfall will help ease a long-term drought in the Delta, but it will not be welcome at this point in the growing season. Last Mondays’ Crop Progress report showed 10% of the US crop had been harvested as of September 15 and 54% with bolls open. Georgia had 57% open, with Mississippi 79% open and Arkansas 92% open. Crop conditions and harvest progress in the Delta and Southeastern states will be watched closely this afternoon. Friday’s Commitments of Traders Report showed managed money traders were net buyers of 18,973 contracts of cotton for the week ending September 17, reducing their net short to 30,518. This  market is emerging from an extremely oversold condition as it works higher, and there is room for more short covering. The dry conditions in Australia may also attract attention.

SUGAR

March Sugar is near unchanged this morning after pushing above Friday’s high slightly overnight. Some rains reached the Center-South region of Brazil over the weekend. Last week, Wilmar cut its projection for Brazil center-south production to 38.8-40.8 million metric tons from an initial estimate of 42 million. The extremely dry conditions in Brazil this year have raised concerns about tight supplies in the first quarter of next year. As of September 1,  center-south 2024/25 sugar production was running 3.9% ahead of last year, but it has been falling behind last year’s pace for two months. Total production for the marketing year is expected to eventually fall behind 2023/24. India’s monsoon rains started retreating from the northwest of the country on Monday, nearly a week later than normal, according to the India Meteorological Department. Rains have been 5.5% above average this year. Thailand’s sugar production dropped by 20.4% during the 2023/24 production year to 8.8 million tons from 11.05 million in 2022/23, according to the Office of Sugar and Cane Board. Production is expected to recover to 10.39 million tons in 2024/25. A cyclone forming in the Caribbean Sea could evolve into a tropical storm could threaten some sugarcane areas in northern Florida later this week. Friday’s Commitments of Traders Report showed managed money traders were net buyers of 25,571 contracts of sugar for the week ending September 17, increasing their net long to 55,522. March Sugar has gained 2.55 cents (13%) since that data was collected, which suggests the net long is even larger. The net long was up over 200,000 at this time last year, which indicates there is room for more buying.

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