Dockworkers Strike To Interrupt Cotton Exports

COCOA

December Cocoa was higher overnight, taking back some of yesterday’s losses. Traders cited increased origin selling with the increase in Ivory Coast’s official farmgate price this week. A UN report said that the volume of cocoa in Ivory Coast and Ghana that can be fully traced did not increase last year, raising questions about how well the two nations will comply with the EU anti-deforestation law, which is supposed to go into effect at the end of this year. The law will require importers of commodities and related goods into the EU to prove that their products were not grown on deforested land. This could be done by tracing their supply chains down to the plot where their raw materials were grown. The EU has been under some pressure to delay or scale back the legislation. There have been reports that importers have increased their purchases in advance of the legislation, and this urgency to buy could keep prices firm, even what appears to be a strong main crop comes in. Rainfall in West Africa is expected to slowly improve across cocoa growing areas and bring better crop conditions after southern Ivory Coast and southwestern Ghana were drier than usual in recent weeks. This will be good for future crop development. In general, the weather this year has been viewed as favorable for the crop.

COFFEE

December Coffee was near unchanged overnight and stayed inside yesterday’s range down. Needed rains for Brazil’s coffee growing areas are at least another week away, but some moisture is creeping into the forecast, and this may have encouraged some selling. The extreme drought this year has stressed trees and lowered expectations for the 2025 crop. The rainy season normally begins around now, and a major change in the pattern is needed end the drought. Industry leaders in Honduras are forecasting that nation’s coffee exports for 2024/25 at 5.37 million bags, which would be up 14.5% from the previous season, but they are concerned that the EU anti-deforestation regulation could interrupt exports. Honduran growers are asking for an extension of the legislation. The dockworkers strike affecting East Coast and Gulf ports could raise concerns about the availability of coffee in the US. ICE arabica stocks fell 12,655 bags yesterday to 801,344, mostly Brazil origin. This is their lowest since June 11.

COTTON

Declining crop conditions for US cotton could lead to tighter US supply, but the slow pace of US exports has been an offsetting factor. The dollar’s rally this week undercuts US export potential, not that exports appear have benefited much from the weak dollar thus far. There are also concerns that the dockworkers strike could interrupt exports out of the Gulf and East Coast. The market may draw some support from crude oil, which is up sharply in the wake of Iran’s retaliatory move against Israel. A tropical disturbance in the Caribbean Sea this week has potential to move into the Gulf of Mexico sometime next week and threaten Florida and or other areas on the Gulf coast. This could pile upon the damage the crop felt from Hurricane Helene. This is still only in the “potential” category, but it should be watched.

SUGAR

Needed rain is in the forecast for Brazil’s Center-South region later next week, but it remains to be seen whether it will be enough to make a big dent in the drought. A bullish take on Wilmar being the sole receiver of deliveries on the expiring October contract is that it indicates they are anxious to secure supplies ahead of an expected long period between crops period in Brazil this year There is talk that the extreme drought Brazil has experienced with bring an early end to the harvest period year and delay the start of the new harvest next year, which officially begins April 1. The European Commission has forecast EU sugar production in 2024/25 at 16.6 million metric tons, up from 15.6 million in 2023/24. This is not a surprise given that sugar beet plantings were up this year. India is expected to see above average rainfall in October after above normal volumes for the past three months. This could benefit the cane crop yield after their dry conditions last year.

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