Sugar Fell to Lowest Level Since Mar 24

COCOA

December Cocoa rallied yesterday to its highest level since June 21, but the high was just above the top of the July-August trading range. Old crop supplies are tight, and the market is awaiting the arrival of the 2024/25 main crop, which is expected to begin next month and increase rapidly in October. Ivory Coast cocoa arrivals were estimated at 9,000 metric tons last week, bringing the total for the 2023/24 marketing year that began last October to 1.688 million tons, down 26.4% from a year ago. Ivory Coast farmers interviewed by Reuters may be turning a bit more guarded on their views towards the upcoming crop. They said that above average rains boosted crop development last week but that cooler temperatures raised some concern. They also said the crop was developing well and they expected good quality beans to leave the bush starting in September. Once harvest begins, warm, sunny weather helps with the dying of the beans and with transportation out of the bush.

COFFEE

Robusta coffee is once again leading the coffee market higher. The November London contract traded to new contract highs yesterday and extended those gains overnight, with the nearby contract approaching  July’s all-time highs. December NY Coffee traded to its highest level since July 11 yesterday and held firm overnight. Concerns about supply have reemerged, with Vietnamese exports still trailing a year ago. There have also been reports of a slowdown in Brazilian exports due to port congestions at Vitoria, which is reportedly running near capacity. The Brazilian robusta harvest is believed to be complete for the season. Safras and Mercado estimated the Arabica harvest at 94% complete as of last week, versus 87% a year ago and an average of 89%.  This conclusion of the harvest could also be reducing price pressure. Dry conditions persist in Brazil, which helps with harvest but raises concern about next year’s crop. There is no risk of damaging cold, according to World Weather Service.

COTTON

December cotton was slightly higher overnight but did not extend yesterday’s rally by much. The weekly Crop Progress Report, released after the close yesterday, showed a deterioration in conditions from last week, with 42% of the US cotton crop rated good/excellent as of Sunday, down from 46% the previous week but up from 33% a year ago. This is the lowest it has been all season and is below to the five-year average for this date of  45%. Texas was 29% G/E, down from 33% last week but up from 10% a year ago. This is also the lowest it has been all season; The five-year average is 31%. 84% of the US crop was setting bolls versus 78% a year ago and 81% on average, and 19% had bolls open versus 17% a year ago and 17% on average. Texas has 23% open and Arkansas 38%. Cotton may have drawn support yesterday from a decline in the dollar. The June Dollar Index broke below its August 2 and fell to its lowest level since January, as expectations for a Fed rate hike continued to build. The Index extended its move slightly lower overnight. This may boost demand expectations, but the global crops look mostly positive and global demand remains a concern. Crops in west Texas may see some further deterioration with extreme heat in the forecast. Conditions look better in the Delta and southeastern US.

SUGAR

October Sugar fell to its lowest level since March 24 overnight, with traders citing weak crude oil prices as the reason for the decline. October Crude Oil fell to its lowest level since August 6 on reports that Israeli Prime Minister Netanyahu had accepted a “bridging proposal” presented by the US to tackle disagreements that are blocking a ceasefire proposal in Gaza. Lower crude price reduce the incentive to produce ethanol from sugar cane. Crude oil bounced off its low and was back near unchanged later this morning. A Reuters poll of 10 analysts yesterday showed had a median expectation for a Brazil Center-South cane crop of 610.5 million metric tons, down from 654.4 million in 2023/24, with 50.5% of the crop going to sugar production, up from 48.9% last year. Total sugar production is expected to be 40.9 million tons, down from 42.4 million in 2023/24. The median forecast also called for a 780,000-ton global surplus in 2024/25 versus 1.4 million in 2023/24.

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