COCOA
Since mid-February, cocoa prices have twice followed sharp selloffs with recoveries that have taken the market to new record highs. And with little relief in sight from West African supply problems, cocoa could be back into record territory this week. Updated weather forecasts are calling for growing areas to receive daily rainfall starting Wednesday and lasting through early next week. This should signal the end of the dry season. Consistent rainfall could benefit the region’s mid-crop production, but the Ivory Coast Coffee and Cocoa Board is projecting this year’s mid-crop to be at least 20% below last year.
COFFEE
Coffee’s failure to sustain last Thursday’s upside breakout does not bode well for prices early this week, but the market has made sizable recovery moves from spike lows in mid-January and late February. The Brazilian real fell almost 1% on Friday, which puts additional pressure on Brazilian growers to sell their remaining 2023/24 supply. Vietnam’s coffee exports in the first two months of the year totaled 398,819 tonnes, up 16% from the same period last year. February exports totaled 160,584 tonnes, which was down 33% from January, but the decline may have been due to slower activity during the Tet holiday.
COTTON
May cotton has continued its volatile action in the wake of the move to contract highs in late February. US old crop supplies are very tight, but world supplies are not, and the US may have priced itself out of the market. Friday’s USDA supply/demand report showed US 2023/24 ending stocks at 2.50 million bales versus an average trade expectation of 2.72 million. This was below the low end of the expected range of 2.55 to 2.9 million and it was down from 2.8 million in the February update. It was also down from 4.25 million in 2022/23 and was lowest since 2013/14. Average US yield was reduced to 822 pounds/acre from 845 in February, and this pulled production down to 12.10 million bales from 12.43 million. Demand numbers were left unchanged.
SUGAR
Updated weather forecasts calling for rain over Brazil’s major cane-growing regions over the next week combined with a pullback in the Brazilian real put mild pressure on sugar late last week, but the market is still looking at lower output for 2024/25 after the dry conditions in late 2023 and the first two months of this year. Early forecasts are calling for Brazilian Center-South sugar production to come in at 40.5-41 million tonnes in 2024/25, which would be down from 42.2 million for 2023/24. Extended forecasts are calling for drier than normal conditions over the next few months. In their supply/demand report on Friday, USDA lowered the forecast for US 2023/24 sugar production to 9.243 million short tons from 9.352 previously.
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