ADMIS News
SUGAR
UNICA will likely release its update on Brazilian Center South sugar production for the first half of July this week, and the trade could be counting in a significant increase in production from June, as dry weather has been conducive to harvest and crushing. The last report showed production for the second half of June was down 13% from a year ago, with cumulative production down 14%. Back in May, analysts were expecting an 18% to 25% increase in Brazilian production this year, so producers seem to have a lot of catching up to do. Production tends to peak for the year in the second half of July. The market is also counting on a sharp increase in Thailand’s production this year, but that nation has hit a dry patch that may start to worry traders. World Weather Service says sugarcane areas are not expected to get much precipitation during the next 10-14 days. Soil moisture is already running short to very short in a part of central Thailand, while crops elsewhere are in mostly good shape. Crops may see some stress, and rains will be critical in a couple of weeks. India is also expected to produce a strong crop, but the southern part of the nation, including the important cane-growing region of Maharashtra, have not benefited as much from the monsoon rainfall as have areas to the north have.
COFFEE
The 50% duties on Brazilian imports are due to go into effect on Friday, and so far there has been little or no report of progress seen towards a resolution. The US gets about one-third of its coffee from Brazil. If the tariffs go into effect, US importers will have to find other sources, and Brazilian growers will be looking for buyers. This would result in more Brazilian coffee on the world market. It would also mean the US would be bidding up for coffee from elsewhere, such as Colombia, Central America and East Africa. As Reuters pointed out, Brazilian exporters would also need to find a new home for the roughly 8 million bags of arabica coffee they ship to the US every year. There was some mention of lower temps in Brazil supporting prices yesterday, but so far the coffee growing regions have avoided any damaging cold this winter.
COTTON
The weekly Crop Progress report showed 55% of the US cotton crop was rated good/excellent as of July 27, down from 57% the previous week but up from 49% a year ago and above the five-year average for this date at 48%. Texas was 50% G/E, down from 52% last week but up from 41% a year ago and 33% on average. Mississippi was 49% G/E, up from 47% last week but down from 54% a year ago and 63% on average. The report also showed 44% of the crop was setting bolls, down from 52% a year ago and just below five-year average for this date of 46%. Arkansas and Mississippi are about a week behind average. As trade agreements are signed with the EU, Japan, Vietnam and other nations, the threats of all-out trade wars diminish, which could support global cotton consumption. However, the July USDA WASDE report showed put the 2024/25 US stocks/use ratio at 32.4%, the highest since 2019/20, and crop conditions have improved this month while US export sales have not.
COCOA
We have been hearing mostly positive weather news from west Africa, with a seasonal decline in rainfall in the main growing areas of Ivory Coast and Ghana over the past few weeks that was views as good for crop development after abundant rainfall being reported in the preceding weeks. World Weather Service speaks of the dry conditions allowing soils to firm up and being conducive to crop development. Cocoa needs periods of rain and sunshine for pod growth and to avoid disease. Ivory Coast farmers interviewed by Reuters said the main cocoa crop was developing well, with many flowers turning into small pods and young pods gaining weight. However, they warned that persistent overcast skies and a cold spell could dry out flowers and pods, while limited sunshine may increase the risk of disease. Hershey told retailers earlier this month that the company is planning to raise its prices by double digits due to high cocoa prices. Earlier this month, the market was confronted with the news of sharp declines in Asian and European grindings in the second quarter, which culminated with a selloff in September Cocoa to its lowest level since November.
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