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Sugar Positioned to Test 4-Week High


The bulls should be encouraged by the way the sugar market was able to quickly discount a bearish Unica supply report yesterday. May sugar was higher overnight, following through on yesterday’s bounce off its lows, and it looks well positioned to test Tuesday’s four-week high today. The market has been dancing around the 50-day moving average for weeks and has failed to make a decisive move above that line despite several attempts. Yesterday’s Unica report showed Brazilian Center-South sugar production for the first half of March at 64,299 tonnes, up from 16,126 tonnes during the second half of February and 15,561 million for the same period last year. The new marketing year will start during April, but crushing activity is already picking up for the season and is running well ahead of a year ago. Traders will be watching Center-South production closely to determine the impact of the region’s extended dry spell.

sugar cubes on sugar background


May cocoa bounced off its lows yesterday and was higher overnight, putting Tuesday’s all-time high in play. There has been no change to The bullish supply outlook, with the trade expecting sharp declines in west Africa’s mid-crop production this year. Market watchers also fret that the lower crops may be structural and not just the result of a couple of years of poor weather. Damage to trees is a long-term problem, and growers complain that they have little incentive to expand production given the current pricing structure. It will likely take a sharp drop in consumption and/or a significant improvement in growing conditions to change the price outlook.


May NY coffee was lower overnight following yesterday’s rally to the highest level since March 7. The market is drawing support from the London robusta contract, which traded to its highest level in 30 years this week, but the NY contract has yet to break out of a three-month consolidation. May London coffee failed to take out yesterday’s contract high overnight, and this may encourage some profit taking. Tight near-term robusta supplies in Vietnam continue to underpin Arabica prices. The Brazilian robusta harvest is expected to begin in April but may not reach full speed until late in the month. Earlier this week the Vietnam Coffee Association forecasted Vietnam’s 2023/24 coffee exports at 1.336 million tonnes, down 20% from 2022/23. However, Bloomberg reported that Vietnam’s first quarter 2024 exports were estimated at 799,000 tonnes, up 44% from the same period last year.


Today’s USDA Prospective Plantings report could determine the direction of the market for the next couple of weeks. For the report, the average trade expectation for US 2024/25 cotton planted area is 10.906 million acres, with a range of expectations from 10.241 million to 11.300. This compares to a forecast of 11.0 million at the USDA outlook forum in February and 10.23 million planted in 2023/24. In 2022/23, the US planted 13.75 million acres. May cotton gave back all this week’s gains yesterday but staged a modest recovery overnight. Nearby cotton broke out above a 15-month consolidation in early February, which is long term bullish, and it found support at the top of that range this week. Last week’s report showed net cotton sales of 133,082 bales for the week ending March 14, down from 198,873 the previous week but above the four-week average of 133,022. Shipments totaled 397,297 bales, which was the highest so far for the 2023/24 marketing year. The surprisingly strong pace of sales (and shipments) is what lifted May futures to contract highs earlier this year.


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