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Indian Monsoon Arrives Late


The slow arrival of the Indian monsoon and the expected arrival of El Nino could threaten sugar production in India and Thailand next season, but in the meantime the market faces a strong Brazilian crop and good harvest conditions. Sugar did break a five-session losing streak on Tuesday and gained a bit overnight, but it has not had more than two consecutive positive days since it put in a contract high at the end of April. The market has drawn tentative support this week by the slow arrival of the Indian monsoon, which has been delayed from its normal June 1 arrival. This is expected to result in below normal rainfall this month, but regardless of the delay, India’s meteorological department is still expecting this year’s monsoon rainfall to be normal. The prospect for El Nino to negatively impact 2023/24 sugar production in India and Thailand has also underpinned prices.

sugar cane


Cocoa prices seemed to run out of steam just after they took out their late April highs, and trader disappointment could leave the market vulnerable to profit-taking early today, but with the market expected to second production deficit in a row in 2022/23, we expect it to be well supported on breaks. The market may have also been pressured by a pullback in the Euro and British Pound dampened European demand expectations on ideas it makes it more difficult for European grinders to acquire cocoa supplies. An increase in weekly Ivory Coast port arrivals also weighed on cocoa prices, as it indicates the midcrop harvest is increasing. Full-season production estimates for Ivory Coast and Ghana still project mild increases from last season but not enough to avoid tight global supplies.


ICE exchange stocks coffee stocks fell another 7,780 bags on Tuesday to their lowest levels so far this year. Declining stocks have been a consistent supportive factor for the coffee market this past week. So has the Brazilian currency, which is approaching its highest level in 14 months. September coffee saw some choppy action on Tuesday, and it went on to post a moderate loss, but the market recovered overnight. The International Coffee Organization is forecasting a global production deficit of 7.3 million bags for the 2022/23 season, slightly bigger than the 7.1 million-bag deficit in 2021/22. They are attributing this to high fertilizer costs and bad weather. Forecasts for dry weather over Brazil’s major Arabica growing regions should help to speed up the harvest after it got off to a slow start, and this has weighed on coffee prices at times this week.


The cotton market appears to need a fundamental driver to move it out of its months-long sideways pattern. The 2023 crop is off to a decent start with 51% of the US crop rated good/excellent versus 48% on average. Demand is decent but not spectacular, with stronger export sales last week and China stepping in to buy. Last week’s drought monitor showed some improvement in soil moisture conditions in west Texas. Drought is still present there, but soil conditions have improved from a year ago. Trader expectations for the USDA supply/demand report on Friday lean bearish. The average trade expectation for US 2023/24 cotton production is 16.35 million bales, up from 15.50 million in the May report. US ending stocks are expected to come in around 3.61 million bales versus 3.30 million in May.


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