Harvest Pressures Coffee Markets

COFFEE

Harvest pressure continues to pressure the coffee markets, especially London robusta but also the NY arabica contract. The Brazilian robusta harvest is reportedly advancing quickly and yield numbers strong. The arabica harvest is slower, and early reports have lower production this year, which is not surprising. However, forecasts have improved from earlier this year.  World Weather Service does not see any threatening cold reaching Brazil coffee growing areas in the near future. ICE certified arabica stocks fell 6,178 bags yesterday to 882,212, their lowest since May 21.

July NY Coffee and July London Coffee are technically oversold and vulnerable to short covering. The London market has led the way lower due to increasing robusta supplies, and a sudden turnaround could spark buying in the NY market as well.

COCOA

July Cocoa is higher this morning after it sold off from its highs yesterday. The market drew support yesterday from a revision lower in ICCO production estimates for 2023/24 and perhaps from uncertainty over the 2024/25 outlook after ICCO did not update its forecast, saying it was reevaluating its methods. Cocoa may also have found support from Ivory Coast port arrivals last week, which were behind year ago levels, as this illustrates the drag on production from the dry conditions earlier this year. Rainfall has improved in recent weeks, which points to increased production later in the season. Ivory Coast farmers interviewed by Reuters yesterday said above-average rains last week signaled a strong finish to the mid-crop. They quoted farmers as saying they had plenty of rain and sun, which is good for the trees and pod development

COTTON

July Cotton was lower overnight after a short covering rally yesterday off stronger oil prices and a weaker dollar. Crude oil is higher again this morning, but the dollar is weaker. The weekly Crop Progress report showed 66% of the US cotton crop was planted as of June 1, which is about two days behind the average for this date (69%). Texas was right on the average pace at 61% planted, Georgia was about 2 days behind at 74%, Arkansas was about 5 days behind at 85%, and Mississippi was about 16 days behind at 54%, due to wet soils and too much rain. The report also showed 49% of the US crop was rated good/excellent versus 61% at this point last year. World Weather Service said yesterday that West Texas rainfall will be scattered this week, which will  favor planting but the more moisture will still be needed in dryland areas.

SUGAR

A reversal lower yesterday and modest selling overnight has July Sugar back below the 17-cent level and back in a negative posture. Apparently neither the pause in the Indian monsoon nor stronger crude oil prices were enough to spark confidence for the bulls. Nor was talk that China had emerged as buyers on the recent break enough to spark a rally. The India Meteorological Agency said rainfall is expected to be subdued for a few days, but the monsoon is expected to strengthen around June 11 or 12 and start covering the remaining parts of the country. Last week’s UNICA report showed a smaller decline from a year ago than expected in Brazil’s Center South sugar production during the first half of May, with production at 2.408 million metric tons versus expectations of 2.2 million.

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