COTTON
With the US harvest two-thirds complete, harvest pressure has eased. March cotton rallied sharply overnight, confirming last week’s low. The trend lower in the dollar helps, but so does two weeks of strong export sales. China said it will stop auctioning cotton from state reserves after November 15. This may be due to the arrival of their new crop. They have been active buyers of US cotton recently, with last week’s sale the second highest since April. The trade had been concerned that China was turning to Brazil and Australia to meet their needs, but the decline in US prices, from a high of 90.00 in September down to 74.77 last week has made US cotton more attractively priced. The weekly Crop Progress report yesterday showed 67% of the US cotton crop was harvested as of November 12, up from 57% the previous week and above the 10-year average of 63%.
COCOA
March cocoa gapped higher overnight into another new contract (and 45-year) high. Ivory Coast port arrivals last week were half of size of year-ago levels, and this was further evidence of a small main crop. Traders wonder how high prices will have to go to shut off demand. The steady decline in consumer inflation levels has helped offset high cocoa prices, and the US CPI report today comes in hot, it could put a temporary chill on the cocoa market. Some areas of west Africa saw above average rainfall last week, which could improve prospects for the late main crop and upcoming mid-crop.
COFFEE
March coffee rebounded from a lower open yesterday, with hot and dry conditions in Brazil raising concerns about coffee production. The major Arabica regions had lower than average rainfall last week, with Somar Meteorologia reporting only 0.8 mm of rain, 2% of the historic average. Temperatures could reach 40 degrees Celsius (104 Fahrenheit) this week. ICE exchange coffee stocks were unchanged on Monday, and they remained at their lowest levels this century. The trade group Cecafe reported Brazil’s October Arabica exports at 3.42 million bags, 8% above the same period last year and up from 2.40 million in September. Brazil’s main port of Santos has seen significant congestion for more than a month, but apparently some coffee is making it through.
SUGAR
Sugar’s coiling action over the past four sessions has kept prices above their 50-day moving average and within striking distance of a new 12-year high. Egypt’s ESIIC announced a tender to purchase 50,000 tonnes of sugar this month, which is the second large tender out of that nation in as many weeks. Brazil’s port congestion threatens to slow the flow of sugar exports for the rest of the year. Williams Brazil reported that the Copersucar terminal at the port of Santos has a two-week waiting time before a ship can be loaded with sugar, but the main CU terminal has a waiting time of 44 days.
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