EU Beet Crop Revised Down

SUGAR

May Sugar was higher early Tuesday but inside Monday’s range and was approaching the upper end of a five-day consolidation. Lower production in Europe, India and Brazil provide underlying support. The European crop-monitoring service MARS on Monday announced it had lowered its yield forecasts for EU sugar beets to 67.4 metric tons per hectare, which  is down 17% from last year and 11% below the five-year average. The Indian monsoon is expected to conclude with rain amounts below 90% of the long period average. Growers in Maharashtra are being pressured into starting the harvest October 15 (two weeks early) to assure there is enough on hand ahead of Diwali. Farmers are pushing back because they are concerned that harvesting too early will lower yields. Brazil center-south production for the first half of September is expected to be below year ago levels due to too much rain. The fund net long is still quite high, which leaves the market vulnerable to long liquidation.

COCOA

December Cocoa was lower overnight, perhaps on technical disappointment when the market failed to close a gap from September 17-18 on its rally on Monday. News that Ghana’s farmer price is roughly $3570 per metric ton versus  $2120 for Ivory Coast raises concerns about smuggling, but it will also attract more supply. Ivory Coast farmers told Reuters that persistent dry weather in Ivory Coast’s cocoa-growing regions could damage many young pods and tighten supply of the September-to-February main crop. Rains were below average last week in most cocoa regions. They said there was no danger for harvests from October to December but warned that crops in January and February could be weak. World Weather Inc. reports that rain in Ivory Coast and southeastern Ghana have indeed been sporadic, and they expect little change in this pattern for the next 7-10 days. This could raise concerns about the cops. Rainfall in Ecuador has been well above average.

COFFEE

December Coffee was moderately lower early Tuesday after rallying to its highest level since September 14 on Monday. The market had fallen into oversold territory after falling 20% from its late August highs. A long-expected bumper crop in Brazil seemed to finally arrive in August after heavy rains in June and July caused a delay in picking and drying. There are remaining concerns about quality, due to the wet conditions. The new crop in Brazil appears to have gotten off to an early start after rains induced flowering. More rain will be needed to advance the crop. Conditions were dry over the weekend and no rain was reported overnight. Rain is expected to return to key growing areas as we move through the week.

COTTON

December Cotton broke below the September 18 low early Tuesday and fell to its lowest level since July 30. Disappointment that cotton was not on the list of US agricultural products for which China was lowering tariffs, weaker crude oil and a strong dollar all undermine support for cotton. US cotton conditions improved marginally last week and the crop is slightly ahead of schedule. The weekly Crop Progress report, released after the close on Monday, showed 35% of the US cotton crop was rated good/excellent as of September 27, up from 34% the previous week but down from 47% a year ago and below the five-year average for this date at 41%. Texas was 18% G/E, up from 15% last week but down from 41% a year ago and below the five-year average at 29%. The report also showed 17% of the US crop had been harvested as of September 27 versus 13% the previous week and a five-year average of 15%. 70% of the crop had bolls open versus a five-year average of 67%. The crop is not getting worse, but it is too late in the season to change the trajectory. Crude oil was lower overnight on news that Saudi Arabia had resumed oil loadings from its Red Sea port of Yanbu after restarting operations on the East-West Pipeline, and this pressures cotton as lower oil prices make polyester less expensive to produce. he dollar reaching its highest level since June make US cotton appear more expensive on the global market.

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