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Vietnamese Jan-Apr Exports Up 5.4%


Dry conditions in Vietnam have supported a rally in London robusta futures this year, and this helped lift July NY futures to new contract highs earlier this month. However, Brazil and Colombia are both expected to see increased Arabica production later this year, ICE exchange stocks have reached their highest level since March 2023, and the fund net long is near record highs, which leaves the market vulnerable to long liquidation. Growers in Vietnam have been complaining about hot and dry weather that has pushed lake levels and water tables down, limiting irrigation supply. There have been ongoing reports of Vietnamese farmers holding onto their remaining supply from this season in anticipation of higher prices. However, Vietnamese government data showed the nation exported 756,000 tonnes of coffee from January through April, which was up 5.4% from a year ago.

coffee spilling from cup


July cocoa gapped lower this morning and fell to its lowest level since April 17. It also fell below the 21-day moving average for the first time since January 11. Ivory Coast cocoa arrivals totaled 17,000 tonnes for the week ending April 28, down from 48,000 for the same week last year. Total arrivals since the marketing year began have reached 1.354 million tonnes, down from 1.907 million for the same period last year, a 29% decline. The market finished last week with a loss of 867 points (down 7.6%), which broke a nine-week winning streak. A shift towards wetter weather over West African growing areas is expected to benefit the region’s upcoming production, and that weighed on prices last week. First quarter grindings from the major demand regions were stronger than expected, due in part to processers working down their cocoa stocks. Those processers will have to build those stocks back up at some point.


July cotton has traded in a relatively narrow range over the past few sessions and has managed to hold the April 18 five-month low. Supportive fundamentals are few, except that the market may be interested in building some sort of weather premium heading into the US growing season, even if soil moisture conditions are good. Last week’s drought monitor showed 9% of US cotton production was in an area experiencing drought versus 39% a year ago and 55% two years ago. Export sales held up surprisingly well last week, coming in at their highest level since February 1. A technical reversal higher in the dollar on Friday could spell trouble for US export prospects if it is the start of a new leg higher for the currency. Recoveries in the stock and crude oil markets last week are supportive to cotton demand. The 6-10 and 8-14-day forecasts call for above to much above temperatures across cotton growing regions, with normal to above-normal chances of rain. The heat may become a concern if moisture comes up short.


May sugar was higher overnight, as the selling last week seemed to dry up when the market failed to make new lows on Friday in the wake of bearish Brazil supply data. The Brazilian trade group Unica released their sugar supply report for the first half of April on Friday, the first for the 2024/25 season. The report put Center-South cane crush at 15.81 million tonnes, up 14.1% from the same period last year and slightly below trade forecasts calling for a 15% gain. Sugar production came in at 710,000 tonnes, up 31% from last year and above trade expectations calling for 689,000. Sugar’s share of crushing was 43.6% versus 38.0% last year. Domestic ethanol sales were 31.5% below last year.


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