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Brazilian Sugar Production Up


Brazilian sugar production continues to exceed last year, and it could put more pressure on the sugar market. El Nino threatens upcoming production in India and Thailand, which could contribute to a global supply deficit for 2023/24. The Brazilian trade group Unica released its latest supply report on Thursday, pegging Center-South sugar production for the second half of July at 3.681 million tonnes, 11.3% above a year ago. Cane crush was 7.8% above last year, which was higher than trade expectations, but sugar production was slightly lower than expected. Sucrose yields declined 2.8%. Sugar’s share of crushing was 50.65%, which is considered close to the maximum. This is up from 47.69% a year ago. The International Sugar Organization has forecast a 2023/24 global production deficit of 2.12 million tonnes, due in large part to expected production declines from India and Thailand. This was its first estimate for the upcoming season. The US Climate Prediction Center has given El Nino a 90% chance of lasting though April, which could hurt the upcoming crop.

sugar cane


December cocoa bounced off its 50-day moving average yesterday, and this could provide some support today. West African growing areas have mostly dry weather in the forecast through the middle of next week which should help to minimize delays in harvesting and transporting cocoa beans. The drier conditions after excessive rains in June and July caused delays and threatened disease has sparked this week’s selloff. Growers are now saying that the rainfall in June and July has been beneficial for the upcoming main crop. This contrasts with earlier fears that dry weather brought on by El Nino would cause problems. In their latest update, the US Climate Prediction Center gave El Nino a 90% chance of lasting though April, which means the threat is not over. Lower than expected results for US CPI and Italian CPI this week were further evidence of a long-term decline in inflation that could be beneficial for chocolate demand. However, China’s sluggish economy could limit Asian consumption.


Evidence that Brazil’s strong arabica crop is reaching the export market has pulled support from coffee prices this week and could be setting the market up for resuming its downtrend. December coffee gapped lower overnight, and it is threatening to take out its July lows at 155.00. Yesterday, Brazil’s largest co-op Cooxupe said that their farmers had completed 74.9% of this year’s harvest by last Friday, which would be their fastest harvest pace since 2020. On Wednesday, the trade group Cecafe reported that Brazil’s arabica exports in July totaled 2.19 million bags, up 6.5% from July 2022. This follows six straight months in which exports were at least 12.7% below year-ago levels.


US cotton export sales rebounded last week, which offers some encouragement to the bulls, but the trade will likely be looking to today’s USDA supply/demand report for direction. The extended period of extreme heat across the southern US and the hot and dry conditions in key growing regions in Texas threaten to lower US cotton production this season. For today’s USDA report, the average trade expectation for US 2023/24 cotton production is 15.78 million bales with a range of expectations from 15.25 to 16.30 million. This would be down from 16.50 million in the July report. Ending stocks are expected to come in at 3.40 million bales, down from 3.80 million in July. If ending stocks come in at the average estimate, they would still be above last year. If they come in at the low estimate, they would be the lowest since 2016/17. The weekly US Drought Monitor showed 21% of the US cotton crop was within an area experiencing drought as of August 8, up from 20% the previous week. A year ago, 66% of the crop was under drought. However, most of the production area has experienced extremely hot weather this summer, and 34% of the US crop is rated poor/very poor, which is the same as last year and compares to a 10-year average of 18%.


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