SUGAR
The sugar market remains on-track for a fourth positive week in a row and its first monthly gain since October. The market was higher overnight after a mild setback yesterday. Tropical Cyclone Kirrily has made landfall in Queensland, Australia as a Category 3 storm, the biggest cyclone to hit the coast in almost five years. The storm has weakened to a tropical low, but it is expected to bring heavy rain and possibly damaging winds as it moves inland.
Yesterday’s Unica report showed Brazil’s Center-South sugar cane crushing at 1.110 million tonnes in the first half of January, up from 440,000 for the same period last year but down from 4.872 million in the second half of December and 19.083 million in first half of December. Ethanol’s share continues to gain as the season winds down, reaching 65.8% in the first half of January versus 62.9% in the second half Of December and 56.6% in the first half of December.
COTTON
March cotton set back overnight after achieving a technical objective yesterday. The market has seen a strong rally over the past week and a half on an improving demand outlook that was driven by strong weekly export sales reports. Yesterday’s report was a bit disappointing, as it showed US cotton sales for the week ending January 18 at 207,044 bales, down from 437,647 the previous week and below the four-week average of 265,058.
Sales have reached 84% of the USDA forecast for the marketing year versus a five-year average of 82%. Traders are expecting business to China to slow down with the approach of the Lunar New Year holiday on February 10. The rally in the US stock market has also boosted demand expectations, and if it continues, it could lend further support to cotton. USDA has announced Special Import Quota #15 for upland cotton, to be established on February 1, allowing the importation of 28,475 bales.
COCOA
Over the past three sessions, March cocoa has seen daily ranges of $150 or more, and on Tuesday and Thursday the market closed more than $200 off its daily high. The International Cocoa Organization said in a report that the high shipping costs on top of high cocoa prices could hurt demand. With prices at 46-year highs, traders are concerned about demand destruction, but so far, these fears have not been verified by the grind data, which have seen smaller reductions than expected.
Bloomberg reported that several processing firms in Ghana had to shut down operations due to a shortage of cocoa beans, and Ivory Coast has halted forward sales of their upcoming 2024/25 crop until they get a better idea of production. An Ivory Coast official said that starting in 2025, their nation will not be able to export cocoa to the EU if the origination of the cocoa is untraceable. In a final accounting, the ICCO calculated world cocoa stocks in warehouses at 1.744 million tonnes as of September 30, 2023, down from 1.843 million in 2022 and 2.059 million in 2021.
This was unchanged from their estimates from the fourth-quarter 2023 bulletin, leaving the production deficit for 2022/23 at 99,000 tonnes. Another, larger deficit is expected for 2023/24 after the poor main crop performance this past fall. Recent comments from Ivory Coast farmers indicate they are more optimistic about the prospects for the mid-crop, which starts in April.
COFFEE
Coffee prices have seen volatile price action over the past seven sessions, but the market continues to stay above the 50-day moving average and remains on track for a positive weekly result. There has been a rebound in global risk sentiment this week, and that has improved demand expectations and attracted new buyers. The NY Arabica market has also drawn support from London robusta futures, which traded to new contract highs overnight.
The Houthi attacks on cargo ships in the Red Sea since the start of the year have delayed the movement of robusta beans from Asia to Europe as ships have gotten diverted around Africa. Rain in the forecast for Brazil’s major Arabica growing regions helped pressure Arabica prices yesterday on ideas it will improve prospects for their 2024/25 crop. However, there were also concerns that some areas could see flooding.
Source: Admis
