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Harvest Pressures Cotton


Harvest pressure and a lack of urgency on the part of buyers have conspired to send December cotton to its lowest level since July 11. Dry weather across the US cotton areas this week should help the harvest continue at a strong pace. The market did stabilize overnight after a four-day selloff, and given the oversold status, it may see some consolidation over the next few sessions. This morning’s weekly US export sales report may provide some support if it comes in strong. Last week’s report showed US cotton sales for the week ending October 19 at 186,061 bales, up from 78,791 the previous week and above the four-week average of 137,607. Cumulative sales for the 2023/24 marketing year are the lowest for this point in the season since 2016/17 and are well behind the average pace relative to the USDA forecast. The dollar fell in the wake of some relatively dovish comments from the Fed Chairman, and this action could be supportive to cotton on ideas a weaker dollar will improve US export prospects.

cotton pod on blue sky


A report this week that recent good weather in west Africa has farmers expecting strong harvests in November and December stands in contrast with persistent complaints of too much rainfall for the past several months. The cocoa market is expected to show a second-straight global production deficit in 2022/23, and the trade is assuming there will be a third one in 2023/24 due to excessive rainfall in west Africa and the threat that El Nino will eventually bring too-dry conditions. On the other hand, the heavy rainfall this year could also make it difficult for cocoa trees to overcome disease and pest problems that have reportedly surfaced this year. Traders are also concerned that high prices will hurt demand, but so far grindings have held up better than expected. Ivory Coast deliveries are behind year ago levels, indicating a poor crop. The market may need to see stronger evidence of an improvement west African production for it put in a top.


The coffee market has held up well in the face of the Brazilian export report for October, which showed their exports surging to 249,567 tonnes (4.16 million bags) in October, up from 2.96 million in September and 3.33 million bags for the same period last year. Given the shipping delays at the Port of Santos, exports could have been even larger. ICE exchange coffee stocks fell another 9,105 bags on Wednesday to 380,033, their lowest level in 24 years. The continued decline in ICE stocks is an indicator of strong demand and could be construed as bullish. Decent rainfall in recent weeks puts the 2024/25 Brazilian crop off on a strong start.


The sugar market is drawing support this week from ongoing delays at Brazilian ports and from revisions lower in the Indian sugar production forecast for 2023/24. Brazil exported 2.878 million tonnes of sugar in October, down from 3.206 million in September and 3.164 million for the same period last year. This decline is despite Center-South production running 24% ahead of last season’s pace as of mid-October. The lower exports show the impact of the port congestion, and with concerns about those delays lasting well into next year, the tight global supply situation could continue. Earlier this week, the India Sugar Mills Association presented a 2023/24 sugar production forecast at 33.7 million tonnes, down from 36.6 million in 2022/23. Thailand has put their sugar exports under heavier scrutiny.


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