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West Africa Rains Should Benefit Crop


July cocoa’s recovery rally stalled last week, and the market broke below a three-day consolidation overnight. Improvement in West African rainfall over the past few weeks and daily rain in the forecast through early next week should benefit late-harvested mid-crop cocoa as well as next season’s main crop. Ivory Coast cocoa arrivals totaled 26,715 tonnes for the week ending May 12, bringing total arrivals since the marketing year began on October 1 to 1.4 million tonnes versus 2.01 million for the same period a year ago. A group of Ivory Coast processors said that their April grindings were 19.8% below last year, and that put full-season grindings 8.9% behind last year’s pace. Rabobank analyst Paul Joules said on Friday that he expects a global production deficit of 360,000 tonnes in 2023/24 and that the 10% decline in production this year has been priced in. He expects another deficit in 2024/25 but a much smaller one than this year.


The sugar market has held within a 1.03 cent trading range for nearly four weeks, and during that time it has failed three attempts to break out, most recently Tuesday’s move to a four-week high. Expectations that the next Unica supply report will show Brazil’s Center-South sugar production remaining at a strong level pressured the market going into the weekend. In its first report for the 2024/25 season on April 26, Unica reported Brazil Center-South sugar production for the first half of April at 710,000 tonnes, up 31% from last year. But the dry conditions that Brazil has experienced since late 2023 that contributed to the strong start could also lower yields as the season progresses. Recent trade forecasts have projected the 2024/25 center-south cane crush to come in below 600 million tonnes from 654 million in 2023/24.


Concerns that drier than normal conditions over Brazil’s major Arabica growing regions will negatively impact a large portion of their upcoming 2024/25 crop may have lent support to the market at last week’s lows. The harvest has begun in some of Brazil’s Arabica growing regions, and the mostly dry weather in the forecast through early next week should help speed it along. ICE exchange arabica stocks rose by 12,255 bags on Friday to reach their highest level since April 2023. The heat wave in Vietnam’s Central Region is forecast to gradually recede during the second half of the month, according to their national weather agency. May 10-20 rainfall is seen reaching 460 mm, 11% higher than the historical average. Rainfall through June 10 is expected to be close to the historical average.


The USDA supply/demand report on Friday came in at the bearish end of expectation but not extremely bearish. The cotton market fell in reaction to the report, but it did not threaten to take out its low from early this month. US growing conditions are good, but the market has little cushion if a weather problem develops. The USDA report showed US 2024/25 cotton production at 16.00 million bales versus an average expectation of 15.73 million bales and a range of expectations from 13.50 to 17.50 million. Exports came in at 13 million bales versus 13.14 million expected and 12.30 million for 2023/24. Ending stocks were forecast at 3.7 million bales versus 3.49 million expected and 2.50 million in 2023/24. World 2024/25 production came in at 119.05 million bales versus 116.74 million expected. The one bullish number was world ending stocks, which came in at 83.01 million bales versus 83.49 million expected and below a downwardly revised 83.08 million for 2023/24. US production is expected to be the highest since 2021/22. So far growing conditions in the US appear favorable, with the latest US drought monitor showing approximately 8% of US cotton production in an area experiencing drought versus 38% a year ago and 56% two years ago.


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