COCOA
December cocoa traded to another new contract high yesterday and held those gains overnight, as the market continues to be concerned about lower production and a tight global supply setup. As prices rise, traders may become concerned about demand, but so far there has not been much evidence of enough of a slowdown in demand to counteract tight supplies. Last week’s Ivory Coast port arrivals came in above year-ago levels, which was a change from recent weeks. This news may have put some temporary pressure on the market yesterday, but it did not keep prices from reaching new highs later in the session. Full-season arrivals remain well behind last year’s pace. Farmers in Ivory Coast say that more rains are needed in the main cocoa growing areas this month to support main crop production ahead of the dry season, which normally begins in mid-November and lasts into March. There were reports that rainfall was below average in most cocoa growing areas last week. Growers are concerned that the dry Harmattan winds will come earlier than normal. They are already on the lookout for drier than normal conditions because of El Nino.
SUGAR
March sugar traded to another new contract high overnight, as tight supplies made worse by Brazil’s port congestion have lifted the market to new 12-year highs. There have been reports that congestion at Brazil’s port of Santos will keep exports slow through the rest of the year, and with India unlikely to allow more sugar exports until well into next year and Thailand looking at lower exports this season, global supplies could remain tight for a while despite a strong Brazilian crop. The recovery in the Brazilian real also eases pressure on Brazil’s Center-South mills to produce sugar for export. There are reports that Egypt’s state commodity buyer GASC bought 100,000 tonnes of white sugar at their latest tender. Downside pressure could come from a softening in risk attitudes or any news that suggests the port congestion in Brazil is easing.
COTTON
December cotton extended its losses overnight, as it continued to approach the 2023 low from June. Active harvest in the US and adequate global supply are encouraging selling of newly harvested crops and are driving remaining longs out of the market. The weekly Crop Progress report showed 57% of the US crop was harvested as of Sunday, up from 49% the previous week but down from 61% a year ago. Harvest conditions were nearly ideal last week with little rain reported. The weather forecast calls for increasing chances of rain in the US cotton belt over the next five days, especially the Delta and the Coastal Bend. West Texas is not looking as wet, but wetter than it did yesterday. Extended rainfall could delay harvest and damage open bolls.
COFFEE
December coffee was moderately lower overnight after reaching its highest level since June 22 on Monday. Prices have climbed 19% over the past month, as tightening near-term supply, a stronger Brazilian currency, and an improving demand outlook have supported the move. The rally has also been supported by fund short covering. Brazilian port congestion is expected to continue to slow the flow of coffee shipments, and that has underpinned prices this week. However, keep in mind that Brazil’s green coffee exports totaled 249,567 tonnes in October, up from 199,845 a year ago.
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