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Strong US Crop Report


July cotton traded to its highest level since April 17 yesterday, but the strong showing in the first official US crop conditions report of the season could undermine bullish ideas. The weekly Crop Progress report showed 60% of the US cotton crop was rated good/excellent as of Sunday versus a 10-year average of 48%. Only 5% were rated poor/very poor versus 13% on average. This was not exactly a surprise, given the improvement in soil moisture in west Texas compared to the past couple of years.

cotton bolle


July sugar backed off from yesterday’s gains overnight. The market remains inside a relatively narrow range since falling below the 19.00 level earlier this month. Prices have been under pressure recently due to the strong start for Brazilian 2024/25 production, but there are concerns that hot and dry weather earlier this year will start to pull yields down. Unica is expected to release its report on Brazilian production for the first half of May this week. A survey by S&P Global Commodity Insights calls for a 6.3% gain from a year ago. Wilmar Sugar, Australia’s largest sugar producer, said strikes have again delayed the start of cane processing and that more delays are expected due to action planned in the coming days. This has been going on for almost two weeks. The USDA’s biannual World Market & Trade report, released last week, projected global 2024/25 sugar production at 186.024 million tonnes, up from 183.495 million in 2023/24 and a 7-year high.


The rally yesterday put July coffee within striking distance of the April contract high. Vietnam’s Ministry of Agriculture and Rural Development is estimating their 2023/24 coffee production at 1.47 million tonnes, down 20% from 2022/23. They blame the impact of climate change, saying the dry season comes earlier and that prolonged hot weather causes water levels at dams in some provinces to rapidly decrease. Also, low coffee prices had previously prompted farmers to switch to higher value crops. The arrival of La Nina later this summer could bring better rainfall, but it may be too late to help the 2024/25 crop. Last week’s rainfall over Brazil’s major arabica growing areas was below normal, which does not help the outlook for their crop. Initial harvesting has noted smaller than normal bean sizes, and their robusta harvest has seen lower than normal yields so far. The USDA estimated this season’s Honduran coffee production at 24% below last year, and that may offset the mild rebound in Colombian production.


July cocoa extended its rally overnight to trade to its highest level since May 1. Ivory Coast port arrivals last week came in slightly below year ago, which kept total arrivals for the season running 29% behind. The market has rallied despite a shift toward wetter weather over West African growing areas this week. Extreme heat during the dry season earlier this year lowered expectations for the mid-crop, and there were reports that rainfall last week was short of ideal. Problems with over-certification of “fairtrade” cocoa in Ivory Coast may add to current supply anxiety. At its low this month, July cocoa fell to the 50% retracement of its entire rally, which could be enough of a correction until production shows actual improvement.


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