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Cotton Needs Better Demand


The cotton market could have a difficult time mounting any significant rally until there is a sharp improvement in the global demand outlook. Low US production this year is being offset by a strong crop in Brazil, and it appears China is ready to lift its ban on Australian imports. The hot and dry conditions in Brazil this season have reportedly encouraged growers to switch some of their plantings from corn and soybeans to cotton. Yesterday’s weekly US export sales report was not bad, but it was not particularly exiting either. The report showed cotton sales for the week ending November 23 at 217,622 bales for the 2023/24 marketing year and 15,400 for 2024/25 for a total of 233,062.

Cotton fields


After extending this week’s rally yesterday, March cocoa turned lower overnight, perhaps on some end of week profit taking and less bullish supply/demand data. A sharp selloff in the Euro and British Pound may have also weighed on prices on ideas the weaker currency will make it more expensive for European grinders to buy cocoa. In its 4th-quarter update, the International Cocoa Organization (ICCO) narrowed its projected global production deficit for 2022/23 to 99,000 tonnes from 117,000 in previously.


Coffee broke out of its recent consolidation zone yesterday in the wake of a sharp decline in ICE exchange stocks, and it extended its rally somewhat overnight. ICE exchange coffee stocks fell another 35,734 bags on Thursday after declining by 33,764 bags on Wednesday. They finished November at 224,006 bags, which is the lowest since February 1999. ICE’s new rules limiting the ability to resubmit older coffee to the exchange take effect today, and stocks have been declining steadily with the approach of the deadline, culminating in the massive declines of the past two days. Now that the day has arrived, the stock levels may start to stabilize.


March sugar broke below a long-term consolidation yesterday and extended its losses overnight to trade to its lowest level since October 4. The Brazilian government agency CONAB said that their nation will have record cane crush and record sugar production this season. The market has been fully aware of Brazil’s strong production this year, with the bi-weekly UNICA reports showing increases of 23% over year ago levels for the 2023/24 marketing year, but shipping delays due to port congestion have supported that market since early October.


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