Ivory Coast Arrivals Trail Last Season

COCOA

West African growing areas have seen better weather in recent weeks, but the latest Ivory Coast port arrivals came in lower than year-ago levels, which keeps their full season port arrivals total well behind last season’s pace. As of August 13, total arrivals for the marketing year (which began on October 1) had reached 2.299 million tonnes, which was down 4.3% from last year. This indicates that midcrop supply remains tight. This season’s West African cocoa production has been negatively impacted by a reduced fertilizer and pesticide usage. This has also been a key factor in the spread of black pod and swollen shoot disease. El Nino, which tends to bring dry conditions to west Africa, is expected to last until the end of the first quarter of 2024, which could negatively impact the upcoming main crop. If Ivory Coast arrivals continue to disappoint, cocoa could make a move back to the highs from earlier this month. If the market starts to see evidence that El Nino is bringing dry weather to west Africa, then expectations for a third straight annual global supply deficit could take hold, which could take the market to new highs.

COFFEE

Reports last week that Brazilian farmers had sold just 41% of their 2023/24 crop by early August versus a long-term average of 46% indicated the potential for increased farmer selling ahead. Brazil’s 2023/24 Arabica crop is expected to come in well above the 2022/23 crop with the USDA projecting an increase of 4.9 million bags. This could offset the combined production losses from other major Arabica-growing nations. The Brazilian real reached a 10-week low yesterday, which provides more incentive for Brazil’s farmers to market their newly harvested coffee supply to foreign customers. ICE exchange coffee stocks fell by 6,564 bags on Monday and are now more than 14,000 bags below their July month-end total.

COTTON

The fact that December cotton was weaker overnight despite sharp reductions in US crop conditions last week suggests the bears are in control. The trade may be focusing on reduced US export prospects due to the stronger dollar, or it may be disappointed that the market did not hold its gains from the bullish supply/demand report on Friday. The weekly Crop Progress showed 36% of the US cotton crop was rated good/excellent as of August 13, down from 41% the previous week. The poor/very poor rating increased to 43% from 34% the previous week, up from 35% a year ago and a 10-year average of 38%. Top producing states of Georgia, Arkansas, North Carolina, Missouri, and Alabama all saw declines in G/E this week. The only state in the top seven to improve was Mississippi, which saw an increase of 1%. The weather forecasts continue to show hotter than normal temperatures across the cotton growing areas (except for Arizona) with below normal precipitation in Texas out through the next 10 days. This leaves little room for improvement.

SUGAR

Brazilian sugar production is well ahead of last year, and recent weakness in the Brazilian real could encourage producers to aggressively market their output. The general consensus is that the global sugar market will experience a supply deficit in 2023/24, but in the meantime the market is facing large production out of Brazil. The Brazilian real reached a 10-week low yesterday, which provides more incentive for Brazil’s Center-South mills to produce sugar for export. India’s 2023 nationwide monsoon rainfall through Monday was 4% below their long-period average, with the South Peninsular region 10% lower. Indian government officials have said that they will need to see a clearer picture of 2023/24 sugar production before lifting their export embargo. This could keep them out of the export market until the second quarter of 2024. From a Reuters poll of 11 analysts, the median estimate called for a global sugar supply deficit of 2.1 million tonnes in 2023/24.

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