Dec Coffee Extended Fri Rally Overnight

COCOA

December Cocoa has traded in a narrow range over the past week, as the market has been supported by tight global supplies but limited by expectations for a decent crop this fall. World Weather Service says rain in west Africa will continue to increase in many areas, as a series of disturbances moves across the region in the next ten days to two weeks. The moisture boost will be greatest in northern cocoa areas, leaving some areas near the coast with limited rainfall for a while longer. There have been mostly favorable reports from producer Ivory Coast growers this summer despite the recent dry conditions. Reports are less consistent from Ghana, the world’s second largest producer, with some analysts expressing concern about the success of their fight against swollen shoot disease. Friday’s Commitments of Traders Report showed managed money traders were net buyers of 1,645 contracts of cocoa for the week ending August 13, increasing their net long to 25,609. This is well off the high of 79,000 from last September and leaves little threat of heavy long liquidation. The ICCO will release its 3^rd-quarter update on the 2023/24 global supply balance later this month.

COFFEE

December Coffee extended Friday’s rally overnight and was approaching last Monday’s five-week high. Safras & Mercado said on Friday that Brazil’s 2024/25 coffee harvest had reached an estimated 96% of the crop as of last Tuesday versus 91% a year ago and a five-year average of 93% for this time of year, which suggests that harvest pressure is easing. Arabica harvest was 94% complete versus 87% a year ago and an average of 89%. Robusta harvest was basically complete. World Weather Service reports that temperatures in Brazil coffee areas turned much warmer during the weekend. The heat accelerated drying rates, and the warm weather should continue into late this week. Some showers and slight cooling will impact Parana, Sao Paulo and southern Sul de Minas this weekend, but there is no risk of crop damaging cold. In the meantime, rainfall in coffee areas of Vietnam’s Central Highlands was restricted during the weekend, while improved rain occurred in northern Sumatra, Indonesia. Southern Sumatra remains too dry. Uganda’s exported 821,593 bags of coffee in July, up were 27% from a year earlier, according to the state-run Uganda Coffee Development Authority. ICE arabica stocks were unchanged Friday at 836,921 bags, unchanged from Thursday but up 8,412 from the previous week and the highest since June 25. Friday’s Commitment of Traders Report showed managed money traders were net buyers of 914 contracts of coffee for the week ending August 13, increasing their net long to 51,984.

COTTON

December Cotton fell to new contract lows on Friday but bounced enough to close slightly higher on the day, and it extended its rally overnight. Friday’s Commitments of Traders Report showed managed money traders were net buyers of 2,569 contracts of cotton for the week ending August 13, reducing their net short to 49,454. This is only slightly off the record net short of the previous week and leaves the market vulnerable to a short covering rally if the market psychology were to switch to bullish. Global supplies are ample, but the persistent hot and dry weather in Texas may have helped the market put in a temporary low last week. World Weather Service reports that excessive heat occurred in the southern U.S. Plains during the weekend and will continue into Thursday. The heat has quickly induced rapid drying conditions, leading to low soil moisture in most of Texas outside of the Panhandle. The US Delta is expected to be drier than usual for an extended period of time, which may lead to some of the best fiber quality in the US this autumn. Southeastern US continues to improve for cotton that survived Tropical Storm Debby. China’s Xinjiang cotton is still rated quite favorably and expected to be a large crop. Turkey and other Middle East production is expected to be average to above average this year, and India and Pakistan weather has been improving for a good production year.

SUGAR

October Sugar was near unchanged overnight after a rally on Friday gave up most of its gains by the end of the session. The market is hovering near its 16-month lows from early this month, as it expects stronger production out of Asia and awaits some sort of setback in Brazilian output, as the dry conditions this year are expected to eventually take a toll. A report from the Indian Sugar and Bio-Energy Manufacturers Association has indicated sufficient stocks to support domestic ethanol production and resume exports. The export factor has been key, as there has been some question if or when India would resume exports after they were suspended last year. Good  monsoon rainfall has boosted the cane crop, but the government needs to balance domestic needs and its support of the ethanol industry against the refiners’ requests to be allowed to export some of their product. China imported 420,000 metric tons of sugar in July, almost three times as much as the same period a year ago. Cumulative imports for 2024 have reached 1.72 million tons, up 42% from last year. Friday’s Commitments of Traders Report showed managed money traders were net buyers of 10,727 contracts of sugar for the week ending August 13, reducing their net short to 8,687. This is close to a neutral position. World Weather Service reminds us that below normal rainfall earlier this year may have cut into some production especially in western and southern Thailand and other parts of southeast Asia, but recent rainfall has revived expectations for Thailand.

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