UNICA Report In Line w/Expectations

COCOA

December Cocoa was near unchanged overnight, is it continued its sideways pattern of the past month-and-a-half. Reports of hot & dry conditions in Ghana could lend some support, but Ivory Coast growers are reporting good growing conditions. Long-term structural problems could hinder a big expansion in west African production, but the weather is much better this year. Tight old-crop supplies provide support, but the main crop looks promising. Harvest could begin next month, and the new marketing year starts October 1.

COFFEE

December Coffee sold off yesterday after the frost threat in Brazil fizzled. World Weather Service reported no crop damaging temperatures Tuesday morning in key coffee production areas of Sul de Minas or any other part of Brazil. Early morning temperatures did come close to freezing near some coffee areas, but none of the key production regions experienced any threatening conditions. This morning may be a little cooler in a few areas, but the results are expected to be the same. To their credit, WWS said all along that the threat was minimal. Brazilian green coffee exports rose nearly 26% in July compared to a year ago, totaling 3.39 million 60-kg bags, with arabica exports totaling 2.49 million bags, up 13% from last year, and robusta exports 900,000 bags, up 82%. Dry weather in Brazil is a threat, and analysts have been lowering their forecasts for the 2024/25 crop as a result. ICE arabica stocks increased 1,764 bags yesterday to 822,946. Stocks pending grading fell 13,491.

COTTON

December Cotton saw a big rally Monday in the wake of the USDA supply/demand report that came in at the bullish end of expectations, but it has given up all of its gains, as the reality that global supply is still large. In the report, USDA revised US and world ending stocks lower, but they were still the highest in five years. World Weather Service says west Texas rainfall will be sporadic and light, leaving many dryland crop areas in need of rain. US Delta rainfall will be welcome in the next ten days to two weeks, but the region along with that of the Tennessee River Basin will see less than usual precipitation over an extended period of time. The recovery in the crude oil market over the past two weeks offers some support, as it makes man-made fibers more expensive to product. The recovery in US equity market is also supportive to demand, but China’s slow economy is still a concern.

SUGAR

October Sugar was lower overnight as the market continued to digest yesterday’s UNICA report, which showed Brazilian Center South sugar production was mostly in line with market expectations. Any support from a frost threat has evaporated, as sugar areas were spared. The UNICA report showed sugar production for the second half of July was at 3.610 million metric tons versus 3.6 million expected. This was down 2.2% from last year but up from 2.939 million in the first half of July, and it was the highest so far for the 2024/25 marketing year that began April 1. Cumulative production has reached 20.753 million tons, up 8.0% from a year ago, which is the narrowest surplus to a year ago since the marketing year began. The report showed second-half July cane crush was 51.316 million tons, down 3.4% from a year ago. Cumulative crush was 332.884 million tons, up 6.7% from last year. During the period, 50.28% of the cane was used for sugar production versus 50.63% for the same period last year. For the entire year so far, sugar’s share has been 49.16% versus 48.62% last year. TRS (total recoverable sugar) for the period was 146.86 kg/ton of sugarcane versus 144.07 last year. For the entire year so far, TRS was is 133.10 kg/ton versus 132.92 last year. Dry conditions are pulling Brazilian production down, but Thailand and India show promise.

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