Dec Cotton Slightly Higher Start

COCOA

December Cocoa was lower overnight after falling below a short term technical support level. The market reached its highest level since June 17 this week on lowered expectations for Ghana’s production due to dry conditions. The market awaits the main crop harvest for west Africa, which is expected to begin next month. The northern half of Ivory Coast, Ghana and Cameroon have seen abundant rain, but the key cocoa growing areas to the south have seen only light rainfall. World Weather Service says a southward shift in the precipitation is still desired by producers but that it may be at least another week before that happens. This could leave some southern crops stressed. Cameroon’s cocoa and coffee association signed agreements with six cocoa exporters on a platform that will provide plantations’ location data to comply with an impending EU regulation on deforestation. Cameroon ships about 80% of its global cocoa production to the EU. The trade is also waiting for the quarterly ICCO update on the 2023/24 global supply balance this week, and there is some speculation that the numbers could be tightened in the wake of the stronger than expected quarterly grind readings.

COFFEE

December Coffee is lower today but inside Tuesday’s range, as it appears to be consolidating the move to new contract highs this week. The market might see some pressure today with the large submission of Brazilian beans for grading at the ICE exchange. ICE arabica stocks fell 6,765 bags yesterday to 831,675, which was down from a peak of 944,145 on Friday. However, the amount pending grading increased by 57,820 bags to 104,415, which is the highest since May 9. Of the total submitted, 50,684 came from Brazil, with 31,484 showing up in Antwerp. Ports in Houston, Miami and New Orleans saw beans submitted for the first time since the Brazilian harvest began. Cash prices in Vietnam increased slightly this week on tight old crop supply as the market awaits the new crop arrival, which typically begins in October. Farmers in Indonesia and Vietnam have been reluctant to sell their limited supply. There a report this morning that contact signing for new crop is not as active as recent years, as exporting firms have  become more cautious about their ability to meet their obligations. Some arabica farms in Sao Paulo, the country’s third largest producing state, were also hit by the fires in farmland, but damage should be limited. Vietnam is getting adequate rainfall, but the main Brazilian coffee areas are still dry, which raises concerns about the upcoming crop.

COTTON

USDA cotton export sales for the week ending August 22 showed net sales of 135,187 bales for the 2024/25 (current) marketing year and net sales of 704 for 2025/26 for a total of 135,891. This was up from 97,936 the previous week and the highest since August 1.

December Cotton was slightly higher overnight following yesterday’s steep selloff. A recovery in the dollar this week after it fell to its lowest level in over a year last week has undermined support. Subsoil moisture is dry in Texas and marginal to dry in the Delta, and US crop conditions have fallen their lowest levels this year. This could make global supply less burdensome. However, US 2024/25 export sales have had a slow start, and traders are concerned that diminishing US-China relations could hurt prospects further. Today’s export sales report could spark the next move. Last week’s report showed 2024/25 US cotton sales for the week ending August 15 at 93,008 bales, down from 125,083 the previous week. Cumulative sales for the 2024/25 marketing year had reached 4.306 million bales, down from 5.165 million the previous year and the lowest for that point in the season since 2016/17. Sales had reached 38% of the USDA forecast for the marketing year versus a five year average of 51% for this point in the season.

SUGAR

The UNICA report on Center-South Brazil sugar production yesterday was considered bullish, as it showed a larger than expected decline, but so far October Sugar has only managed to take out Tuesday’s six-week high by 0.20 cents. With the market having already seen a sharp rally off the fires in Brazil this week, the UNICA numbers may have been boring by comparison. The report showed sugar production at 3.109 million metric tons for first half of August, down from 3.464 million (-10.2%) from for the same period last year. This was down from 3.610 million for the second half of July and below pre-report expectations calling for 3.28 million. Cumulative sugar production since the marketing year began in April has reached 29.910 million tons, up 5.4% from a year ago versus +8% as of August 1. The production surplus to year ago levels has been steadily declining since June 30, when it was 15.7% higher. Sugar’s share of cane crushing was 49.3% in the first half of August versus 50.8% a year ago. There were 70.9 kg of sugar produced per ton of sugarcane versus 72.3 kg a year ago.

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