Sept Cocoa Higher This AM

COCOA

September Cocoa is higher this morning and has broken out above a six-day trading range. The market apparently found buyers when it briefly fell below the 7000-level this week. Improvements in rainfall for west Africa have eased some concerns, but the crop is far from “made.” ING mentioned the weather turning favorable in some countries, including Ghana and Nigeria, with a combination of rains and increasing sunshine. But there were also reports that Ivory Coast saw some heavy showers that disrupted mid-crop activities. If rains are too heavy, they can knock flowers off trees.

COFFEE

September Coffee was lower overnight but stayed inside yesterday’s range. The market has been in a sideways pattern for almost six weeks, as it has been balancing tight robusta supplies against an active harvest in Brazil. The Brazilian real fell to its lowest level since March 2023 yesterday, and the weak currency encourages exporters to sell. The real has closed lower for six straight weeks. ICE arabica stocks increased by 8,010 bags yesterday to 823,726. This is the highest they have been since June 30. So far this season, Brazil coffee growing regions have avoided any threat of frost. There is no imminent threat, but this is the time of year when they occur, and forecasters are not ruling it out.

COTTON

December Cotton was near unchanged overnight, as trading seems to have slowed ahead of the July 4^th holiday. The decline in crop conditions did not offer much support to the market, perhaps because the Delta and southeast growing regions have received decent rains this week. The increase in planted area from last Friday’s acreage report hangs over the market. The 6-10-day forecast calls for normal or even below normal temperatures in Texas and the northern Delta. The southeast could stay hot, but that will be accompanied by above normal rainfall chances. Southern Georgia and the eastern regions of the Carolinas look the hottest, so they will need the moisture to offset evaporation. In a speech yesterday, Fed Chair Powell said that recent data represented significant progress on inflation, but he added that the Fed needs more data before changing policy. A rate cut would improve demand expectations. The Export Sales report will be delayed until Friday due to the holiday. Last week’s report showed combined new and old crop sales at 158,190 bales for the week ending June 20, which was the lowest since April 25.

SUGAR

An outside day higher yesterday keeps the uptrend intact for October Sugar. The bulls can take encouragement from the market’s ability to rally despite a resurgence in India’s monsoon and the heavy deliveries this week against the July contract. Reuters said over that Thailand’s sugarcane belt experienced rainy weather over the past week, which benefitted the crop, but forecast calls for drier weather the next week. Brazil exported 2.766 million tons of sugar in June, down from 2.890 million in May but up from 2.651 million a year ago. This was the strongest June in a least seven years. Cumulative exports for 2024 have reached 14.217 million tons, the strongest in at least seven years. Exports as of June 1 were up 44% from last year. However, persistent dryness in Brazil has traders concerned that the harvest, which started out strong, could end early.

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