COCOA
A more optimistic tone for west African cocoa production offers a dramatic change from the repeated complaints of too much rain and poor growing conditions of the past few months. Growers in Ivory Coast are saying above average rains interspersed with sun last week in most of the main cocoa growing regions will help the October-March main crop finish strong. They said the availability of beans had risen significantly since the start of December compared with the last two months and that if the weather continues to be adequate until late December, the quantity and quality of beans will be good in February and March. They are hoping that the dry Harmattan winds, which blow from the Sahara Desert between December and March, will remain mild.
SUGAR
March sugar bounced off technical support yesterday after a sharp, three-day selloff, and that level will be key support today. At yesterday’s lows the market had lost 8.5% in three sessions and had become technically oversold. News that Brazilian sugar exports increased 10.2% in November from a year ago indicated that the port congestion was easing and that the large Brazilian production would reduce global tightness. Czarnikow has adjusted its 2023/24 forecast from a global production deficit of 3.0 million tonnes to a surplus of 200,000, due to the large increase in Brazilian production and a moderate increase for the EU. However, cane growing areas in India have seen hail and storm damage over the past few weeks which could further reduce their upcoming production.
COTTON
March cotton broke below last week’s consolidation to trade to its lowest level since November 10 yesterday, and it could be headed back to the November low if the demand outlook does not improve. There may be some consolidation ahead of the monthly USDA Crop Production and supply demand reports on Friday, but the trade may also be wary that US 2023/24 production could be revised higher, as it was in November. The December Dollar Index traded to its highest level since November 23 yesterday, which is viewed as negative for US cotton exports. A negative turn in global risk sentiment and weaker crude oil and equity markets are also negative for cotton consumption.
COFFEE
March coffee traded in a narrow range overnight inside yesterday’s range. The market got ahead of itself with the rally last week and has been receiving some bearish supply news since, with better chances of rain in the forecast for Brazil and reports of stronger exports from Brazil and Central America. ICE exchange coffee stocks were unchanged again on Monday with no grading taking place.
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