SUGAR
With the prospect of record Brazilian exports now in jeopardy, sugar prices may be setting up for a upside breakout and a move towards a new 12-year high. Lower production from Thailand and India had been balanced against a sharp increase from Brazil this year, but port congestion has slowed exports and kept supplies very tight. Brazil’s port of Paranagua was projected to resume operations on Saturday following last week’s fire, but shipping delay continue at the Port of Santos, which is Brazil’s main sugar exporting port. These bottlenecks may end up reducing this season’s exports by several million tonnes. India’s state of Maharashtra is expected to see a 9.8% decline in cane available for crushing this season, but there are a record 217 mills applying for operating licenses. India is looking more likely that it will extend its sugar export ban well into next year, and Thailand’s recent moves to increase regulation may lead to significant restrictions in their exports.
COTTON
Despite a poor US crop, world cotton supplies appear adequate, and with good harvest weather last week, US producers seemed anxious to sell. The 1-5-day forecast calls for about 0.50-1.00 inch of rain in the Delta and 2.00-2.50 inches in the Coastal Bend region, which could cause some disruption to what is left of the harvest there and my slow some of the selling. West Texas is only expected to get 0.10 inch. This follows a period of dry conditions last week that likely gave the harvest a good chance to advance. Last week’s Crop Progress report showed 54% had been harvested as of October 29, and we expect this afternoon’s report to show good progress. The US Dollar Index collapsed on Friday and fell to its lowest level since September 20, and it extended those losses slightly overnight. This makes US cotton exports less expensive on the world market, and if this trend continues, it could improve the outlook for US exports. The fact that December cotton has fallen to its lowest level since July and is only 2.50 above the June low also makes US cotton more competitive
COCOA
Ivory coast cocoa arrivals are still running behind year ago levels, but a slight improvement last week could be viewed as bearish today. Arrivals totaled 63,000 tonnes for the week ending November 5, up from 53,000 the previous week. Total arrivals since the start of the marketing year on October 1 had reached 290,000 tonnes, down 16.7% from the same period last year. The slight improvement in arrivals last week is a change of trend from recent weeks. December cocoa was lower in the wake of the news overnight after trading to new contract highs earlier in the session. The euro and British pound saw strong rallies last week and they have extended their moves this morning, and this is viewed as supportive to cocoa as it improves the purchasing power of European grinders.
COFFEE
Brazilian port congestion has kept near-term global supplies tight despite a strong Brazilian crop this year, and there were reports last week that the shipping delays could extend into next year. ICE exchange coffee stocks fell another 8,091bags on Friday to reach their lowest levels since May 1999, and traders report that the shipping delays have forced roasters to turn to exchange stocks for supply. After a failed attempt in October, December coffee pushed through and closed decisively above the 200-day moving average on Friday, and it made additional gains overnight.
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