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Dryness Concerns in Center-South Brazil


July sugar broke out above a three-week consolidation earlier this week, but it has not built on its rally. The market could be building a base of support for a potential rally as it waits to see how the Brazilian crop fares. The agricultural consultancy Datagro said this week that it expects a small global sugar surplus of 1.62 million tonnes in 2024/25 after posting a deficit of 1.79 million in 2023/24. Brazil’s production has gotten off to a strong start for 2024/25, but dry conditions in Center-South sugar growing areas could lower yields as the season progresses. The US Climate Prediction Center has given a 69% chance for a La Nina weather event to begin during the July/September timeframe. This could bring increased rainfall to India and Thailand cane-growing areas after dry conditions lowered their 2023/24 crops.

brown sugar cubes


West African cocoa production this season remains far behind last year’s pace, and dry conditions remain a concern. The rainy season has arrived, but it could take some time to see good pod development after the excessive heat the region saw earlier this year. The US Climate Prediction Center is giving a 49% chance for La Nina to arrive during the June-August timeframe and a 69% chance of it developing between July and September. This could bring wetter conditions to West Africa and help the 2024/25 main crop. In the meantime, the region needs more rain to help move the 2023/24 mid-crop along.


Brazil’s major Arabica growing regions have seen little or no rain for the past two weeks, and this is raising concerns about their 2024/25 crop. Vietnam’s growing areas remain dry as well. The US Climate Prediction Center has given a 69% chance for La Nina to arrive in the July-September timeframe, which could bring increased rainfall to southeast Asia. However, this would be in time to allow Vietnam’s lakes and reservoirs to be replenished before the start of the 2024/25 season. The Buon Ma Thuot Coffee Association said yesterday that this month’s total rainfall in Dak Lak province in Vietnam is likely to be 50% lower than last year.


July cotton is lower this morning as the market has brushed aside yesterday’s bullish export sales report in anticipation of the USDA supply/demand report today that will show the first breakdown for the 2024/25 season. For the report, a Bloomberg survey shows an average trade expectation for US 2024/25 cotton production at 15.73 million bales, with a range of 13.50-17.50 million. Exports are expected to come in around 13.14 million bales versus 12.30 million in 2023/24. Ending stocks are expected at 3.49 million versus 2.50 million in 2023/24 and 4.25 million in 2022/23. World production is expected to be around 116.74 million bales and consumption at 115.86 million. Ending stocks are expected to come in at 83.49 million, which would be up from 83.08 in 2023/24 and the highest since 2019/20. The weekly US Drought Monitor showed approximately 8% of US cotton production was in an area experiencing drought as of May 7, unchanged from last week and down from 38% last year and 56% two years ago. US cotton export sales for the week ending May 2 came in at 253,660 bales for the 2023/24 (current) marketing year and 158,872 for 2024/25 for a total of 412,532. This was up from 131,815 the previous week and was the highest since January 11. Cumulative sales for 2023/24 have reached 101% of the USDA forecast for the marketing year versus a five-year average of 105% for this point in the season.


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