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New Contract High for Robusta Coffee


May NY (arabica) coffee extended yesterday’s rally overnight to trade to its highest level since September 2022. May London (robusta) coffee traded to a new contract high, with the nearby contract reaching its highest level since October 1994. The NY contract is clearly being led by London, as robusta supplies are extremely tight, and the market is vulnerable to any reports of problems with upcoming crops. There are renewed concerns about heat and drought in top robusta producer Vietnam. Brazil is the world’s largest arabica producer, but it is also the second largest robusta producer, and they are expected to harvest a larger robusta crop this year. Harvest should begin later this month and extend into May, with supplies becoming available in June and July, once drying and processing are completed. Reports this week of heavy rains doing damage to trees in Minas Gerais, Brazil are raising concerns about the upcoming arabica crop.


May cocoa extended yesterday’s losses overnight. The market has been under pressure this week from moves by the cocoa marketing boards in Ivory Coast and Ghana to increase farmgate prices paid to producers, as this may draw more beans to market. A spokesman for Ghana’s marketing board, Cocobod, said yesterday that the group will raise its fixed farmgate price by 50% for the mid-crop. This follows a similar move by Ivory Coast earlier this week. The boards are also hoping to slow the smuggling of beans across borders. Cocobod said they lost about 150,000 tonnes to smuggling and illegal gold mining in 2022/23. Nearby cocoa reached all-time highs this year after extremely hot and dry conditions in west Africa this winter lowered expectations for the upcoming mid-crop, which would exacerbate an already tight global supply situation. There is a possibility that the shift towards wetter weather will improve the mid-crop’s prospects.


May cotton has been under pressure this week from indications of strong production in Australia, which will offer competition with the US as their crop comes in. Most of their cotton in harvested in April and May. The dollar index sold off yesterday, but prior to that it had reached its highest level since early November. The strong dollar makes US cotton appear more expensive on the export market. If it continues to decline, it could lend support to cotton. Traders are looking to morning’s weekly US export sales report for clues of emerging competition from Brazil and Australia.


The sugar market has seen pressure this week from improving production prospects out of Asia. The Thai Sugar Millers Corporation has raised its forecast for Thailand’s 2023/24 sugar production to 8.75 million tonnes, up from 7.5 million previously. In India, the ISMA trade group is asking the government to allow 1 million tonnes of sugar exports this season. The group has projected India’s 2023/24 ending sugar stocks at 9.1 million tonnes, up from 5.6 million tonnes in 2022/23. Brazil’s Center-South cane harvest is getting underway, and it should reach full speed by mid-April. The trade will be watching the early production numbers, as the dry conditions in the region over the past several months have lowered expectations for the upcoming crop.


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