SUGAR
The sugar market was near unchanged overnight in anticipation of Unica’s semi-monthly Brazil sugar supply report, which is expected to be released today. Brazil’s production is running well ahead of last year, but shipping delays have slowed the export pace, and global supplies are very tight. Since the start of the fourth quarter, prices have recovered from six brief pullbacks, and they are within striking distance of Monday’s 12-year high. For the Unica report, sugar production for the second half of October is expected to come in above year ago levels. Dry weather in late October was good for harvest and crushing activity. Sugar’s share of crushing is expected to remain close to the 48% level that it held in the first half of October.
COCOA
December cocoa traded to another, new 45-year high overnight, and it is on course for a sixth positive week in a row. Demand has held up against high inflation over the past couple of years, but the question is, how well can it do when cocoa prices are at 45-year highs? West African production has fallen well behind last season’s pace. The ICCO forecast a second straight global supply deficit for 2022/23, and the poor start to the west African production main crop roduction, coupled with the arrival of El Nino, has traders expecting a third deficit in 2023/24. The US Climate Prediction Center’s monthly ENSO update predicted that the El Nino event would last into the North American spring and gave a 62% chance for it to continue through the April-June timeframe. How reliably El Nino affects the weather in west Africa is debatable, but it appears that coastal regions can see heavy, erratic rainfall and inland areas reduced amounts.
COFFEE
December coffee was lower overnight after achieving a key retracement level yesterday. Prices have gained 24% over the past five weeks despite expectations of large Brazilian production next season. Brazilian coffee shipments have been obstructed by congestion at the port of Santos, and that continues to be a source of strength for the market. There have been reports that so many ships are backed up that delays could last through the end of the year. ICE exchange coffee stocks fell another 8,266 bags on Thursday to reach their lowest level this century, and there is no coffee waiting to go through the exchange’s grading process.
COTTON
The USDA supply/demand report yesterday came in at the bearish end of expectations, but it was not as though the trade was expecting any big changes, and the report did not prevent December cotton from closing higher yesterday from a deeply oversold level. US 2023/24 production was raised to 13.09 million bales, up from 12.82 million in the October report. Ending stocks came in at 3.20 million bales versus 2.83 million expected (range 2.60-3.10) and up from 2.80 million in October. Stocks were above the upper end of expectations, but they were still the lowest in four years. The only major exporter that saw an increase in production was the US. US cotton export sales for the week ending November 2 came in at 395,170 bales for the 2023/24 marketing year and 44,528 for 2024/25 for a total of 439,698. This was down from 544,953 the previous week, but it was the second highest since June 1. The strong sales of the past two weeks have been aided by sharply lower US prices and a modest decline in the dollar. Sales are slow, with commitments the lowest for this point in the marketing year since 2016/17. They have reached 60% of the USDA forecast for the marketing year versus a five-year average of 66% for this point in the season.
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