Cotton Market Disappointed With Export Sales

COCOA

December Cocoa shot higher yesterday after a breakout out of a long-term triangle formation sparked aggressive buying. The market closed well off the highs, but still higher on the day. The trade is awaiting the arrival of the main crop, and the weather this summer past summer suggests the crop will be much better than last year. Sources within Ivory Coast’s Coffee and Cocoa Council (CCC) told Reuters that the group’s regulator has significantly curbed the hoarding of beans in September, due to the threat of sanctions against buyers and cooperatives. This is evidenced in the strong arrivals pace this month, with an estimated 58,000 metric tons delivered so far compared to 20,000 for the same period a year ago. A new farmgate prices will be announced on October 1, and it is expected to match or be slightly higher than Ghana’s, which increased its price 45% from last year. Some traders suggest that fewer beans being held back will mean a slower arrivals pace in October than last year. World Weather Service said waves of rain are expected through the next week in Ivory Coast, Ghana, Nigeria and Cameroon. This could improving soil moisture and crop conditions in the driest areas. Most of the daily rainfall should be light to moderate, but a few bouts of heavier rain cannot be ruled out periodically. Southern Ivory Coast received some light rain overnight.

COFFEE

December Coffee traded to a new contract high yesterday but backed off that level overnight. Warm and dry conditions are in the forecast for Brazil’s coffee growing areas for the next two weeks. The trees need rain to induce flowering for the 2025 crop. World Weather Service says that any rain that falls will be sporadic and light, although there will eventually be some potential for spotty rain throughout the production region. None of the rain will be sufficient to counter evaporation. Welcome rain fell in parts of Indonesia this week, which could help improve conditions for coffee, and more showers and thunderstorms are expected through the next week. Vietnam continues to see ample rainfall. ICE arabica stocks fell by 10,367 bags yesterday to 820,220, which is their lowest since July 29. Stocks are down 17,436 in the past week.

COTTON

December Cotton was moderately higher overnight but inside yesterday’s range. The market is waiting to see the extent of damage from Hurricane Helene, which made landfall in the Big Bend area of Florida as a category-4 storm and moved northward into southern Georgia. It is now towards the middle of the state and has been reduced tropical storm status. Heavy rains can cause discoloration to open bolls, but the hurricane force winds in the south could have also done some permanent damage to the crop. The market was clearly disappointed with the export sales report yesterday, and this may have kept the market less focused on the storm. The export sales report showed net sales of 87,784 bales for the week ending September 19, down from 117,361 the previous week and the lowest since February. Shipments at 79,504 bales were the lowest since August 1.

SUGAR

March Sugar gapped lowed overnight and sold off significantly after trading to its highest level in 10 months yesterday. After gaining 4.90 cents (26%) off the September lows in three weeks, prices may have risen high enough to attract some producer selling. The drought in Brazil is expected to last another couple of weeks, and there are expectations that their 2024/25 cane harvest will end early and that the new harvest in 2025 will be delayed. This would mean that 2024/25 production will be stronger than expected but come at the expense of lower production for 2025/26. The UNICA report on Brazil’s Center South production for the first half of September is due out any day. Some analysts are expecting higher production for the period than last year, which is counter to recent trends, perhaps due to accelerated harvesting that may have resulted from the delay in the start of their rainy season. BMI cited data showing that at least 2.4% of Brazil’ sugarcane area in Brazil has been hit by wildfires. The have lowered their forecast for Brazil’s sugar production for 2024/25 by 2 million tons to 39 million and have reduced the global sugar surplus by 2 million tons to 1.9 million. Rainfall has been ample in Thailand and India, which will help offset Brazil’s shortage. There is debate whether the Indian government will allow exports due to their interest in boosting their ethanol industry.

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