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Choppy Ahead of Grind Data


July cocoa was slightly higher overnight after yesterday’s sharp setback. The trade is expecting tomorrow’s European, Asian, and North American first-quarter grind stats to come in lower than a year ago due to the tight bean supply rather than because high prices are curbing demand, but the selloff yesterday does suggest some trader nervousness after prices reached new all-time highs again this week. This was the second time this month that prices had fallen $1100 or more after making a new contract high. The European grind will be released several hours before the market’s opening tomorrow, Asia is expected just after the open, and North America after the close. Daily rainfall is in the forecast for West African growing areas starting on Friday, which could be beneficial for crops down the road.

cocoa pod close up


July NY coffee managed to move to new highs overnight despite a collapse in the Brazilian real yesterday to its lowest level since March 2024. The market still seems to be drawing support from tight robusta supplies and fund buying interest. Vietnam’s robusta production fell 20% in 2023/24, and dry conditions have sparked concerns that the 2024/25 crop will be even worse. Concerns that an escalation in the conflict in the Middle East would further disrupt the flow of coffee from Asia to Europe may have added to rally this week. July robusta futures traded to new all-time highs yesterday and were slightly higher overnight, which lends support to the NY arabica futures. Following below normal rainfall last week, Brazil’s major Arabica growing regions have only one day with rain in the forecast through the middle of next week, which may have a negative impact on the upcoming crop. Global supply tightness could start to ease as Brazil’s robusta harvest advances over the next few weeks.


The steep selloff yesterday in July cotton was attributed to long liquidation, as funds appeared to be throwing in the towel. Unlike the past two years, US cotton growing areas have decent soil moisture at the start of the season. As of April 9, only 11% of US cotton production was within an area experiencing drought versus 40% a year ago and 60% two years ago. US production fell to 12.10 million bales in 2023/24, the lowest since 1986/87 and down from 14.47 million the previous year and 17.52 million the year before that. Ending stocks fell to 2.50 million bales, which was the lowest since 2013/14. The world situation is not nearly as tight, with ending stocks down from last year but the second highest since 2019/20. With crops in Brazil and Australia becoming available, the trade expects heavy competition for export sales in the months ahead. The recent gains in the dollar, with the nearby Dollar Index reaching its highest level since October this week, make US exports less competitive on the world market.


July sugar fell to its lowest level since April 2023 yesterday as it faced a wall of bearish news. India is expected to see slightly above normal monsoon rainfall this summer, which bodes well for the 2024/25 cane crop, and the 2023/24 crop is looking better than previously thought. The Brazilian real was down sharply for the second straight day yesterday, falling to its lowest level since March 2023. This could encourage Center-South mills to produce more sugar for export. Rainfall in Brazil has been close to normal recently, which has improved the outlook for their 2024/25 cane crop after dry conditions earlier this year had lowered expectations. Czarnikow expects global sugar production to reach 187.3 million tonnes in 2024/25, up from 2023/24 and the second highest on record. They pointed to higher cane acreage in Thailand and more European beet plantings, among other factors.


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