SUGAR
March sugar extended its losses overnight ahead of the Unica report on Brazilian sugar production for the second half of November, which is expected to be released today. The Unica reports have been showing consistently strong production this year, with central-south production running 30.92% ahead of last year during the first half of November and 23.15 ahead for the 2023/24 marketing year so far. There have been reports that India’s sugar production will increase by 2 to 2.5 million tonnes now that the government has placed a ban on mills using cane juice for ethanol production. Many of India’s mills can use grain for ethanol production, and that may help keep the restrictions on cane juice usage in place well into next year. Given the steep selloff in sugar over the past few weeks, a surprise decline in today’s Unica report could help the market find at least a temporary low.
COCOA
The fundamental setup for the cocoa market keeps getting tighter. Yesterday’s weekly Ivory Coast port arrivals report showed them running 35% behind last year. Arrivals have been slipping further and further behind with each weekly report. Ghana’s early season production may be in even worse shape, with their arrivals running 51% behind last season as of late November. This season’s shortfall was due in part to the heavier than normal rainfall over the past few months. This could provide some extra benefit to cocoa trees during the region’s dry season. A shift towards drier weather over West African growing areas during the past few weeks should help speed up the harvest and drying of cocoa beans, but so far that has not shown up in the weekly arrival figures.
COFFEE
March coffee extended yesterday’s rally overnight and approached the six-month high from December 1. Rainfall last week over Brazil’s major Arabica growing regions was only 53% of the long-term average, which renewed the concerns over the 2024/25 crop and fueled short-covering rally. Cecafe reported that Brazilian green coffee exports totaled 4.098 million bags in November, up from 3.465 million last year, but the growth came from robusta shipments. Brazil’s coffee exports to China for January through November were up 221% from the same period last year at 1.15 million bags versus 358,810 for the same period in 2022. China’s growth as a coffee consumer has expanded dramatically. One report said they have the most branded shops in the world, having overtaken the US after a 58% increase last year. Colombia’s coffee production in November came in at 1.282 million bags, 21% above a year ago. But their 12-month production total (December 2022 to November 2023) is 11.108 million bags, down 480,000 from the same period last year and down 1.827 million from 2021.
COTTON
March cotton has backed off after last week’s attempt to push through the long term, 200-day moving average, as tighter US supply does not translate to a tighter global supply. The USDA supply/demand report on Friday showed US stocks/usage at 22%, which is the lowest since 2020/21, but unfortunately for the bulls, global stocks/usage was 72.5%, which is above last year and the second highest since 2019/20. China’s consumption was revised down by 1 million bales. Brazil is expected to export 11.5 million bales this year versus 6.66 million in 2022/23. US exports are expected to total 12.20 million bales. US weekly export sales are off to their slowest start since 2016/27.
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