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Back and Fill Pricing in Cocoa


May cocoa was lower overnight as the market saw some back and fill in the wake of achieving a long-term bullish objective yesterday. There has been no fundamental change, except perhaps some increased sensitivity to the idea that demand pressures are starting to emerge. The market is overbought technically, which leaves it vulnerable to wide price swings. Ghana’s problems with securing additional financing for cocoa bean purchases may keep additional supply from entering the global export market. In 2025, the European Union will require cocoa bean imports to have GPS coordinates that verify they were not grown on deforested land. Europe is the world’s largest processor of cocoa, and beans that do not meet the EU’s requirements will likely be shipped to Asia and North America. The damage to cocoa production from diseased trees and pour weather over the past year, compounded by steady growth in demand in recent decades, could continue to support prices beyond short-term corrections.

Chocolate bar


London robusta futures traded to another new all-time high overnight, and this lent support to NY Arabica futures as well. The Vietnam Coffee Association forecast their nation’s 2023/24 coffee exports to drop 20% from 2022/23 after their poor crop last year, and a recent hot/dry spell in Vietnam has raised concerns about the upcoming crop. Yesterday there were reports that recent rainfall in Vietnam has been at the lower end of the 10-year range and that temperatures have been on the higher end. There may be some relief to supply after Brazil’s conillion (robusta) harvest begins in April. European green coffee stocks fell to 6.7 million bags in February, 41% below year-ago, according to data from the European Coffee Federation. ICE exchange Arabica stocks were up 8,356 bags yesterday to 585,379, the highest since May 30.


May cotton rallied sharply yesterday after bouncing off the 50-day moving average and the 50% retracement of the November-February rally on Monday, but it backed off from its levels overnight. We can expect consolidation ahead of the USDA Prospective Plantings report tomorrow. For the report, the average trade expectation for US 2024/25 cotton planted area is 10.906 million acres, with a range of expectations from 10.241 million to 11.300. This compares to a forecast of 11.0 million at the USDA outlook forum in February and 10.23 million planted in 2023/24. In 2022/23, the US planted 13.75 million acres. Keep in mind that US soil moisture has improved much over last year, with only 7% of US cotton production area currently under drought versus 46% a year ago, and that could encourage heavier plantings.


May sugar was lower overnight and gave back most of yesterday’s gains. The market did manage to close above the 50-day moving average for the first time since February yesterday, but the bulls appeared to throw in the towel after the futures failed to follow through on their gains overnight. Traders are assessing the impact of the bridge collapse in Baltimore. ASR Group, the largest sugar company in the US, has a sugar refinery in Baltimore that is supplied by vessels coming to the port there. The company said it has six to eight weeks of raw sugar stocks at that refinery. American sugar producers are seeking to curb imports from Mexico. The American Sugar Coalition, a group representing cane and beet growers, has sent a letter requesting that the US Department of Commerce lower the amount of sugar that Mexico is allowed to export to the US by 44% effective April 1. The ASC contends that Mexican sugar shipments to US have continued to flow despite their production falling off sharply last year. Safras and Mercado forecast Brazil’s 2024/25 nationwide cane production at 666 million tonnes, down from 706 million for 2023/24. Brazil’s UNICA will release its supply reports for the first half of March this morning.


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