Ivory Coast

The Commodities Feed: Copper spread tightens on inventory withdrawals Oil prices are trading under pressure this morning on demand side uncertainties as Saudi Arabia increased the official selling price for July deliveries for all regions. LME copper continues to see inventory withdrawals as demand in Asia picks up.   Energy – Saudi increases the official selling price for oil Saudi Arabia increased its official selling price for all regions for July, a day after the nation pledged an additional oil supply cut for the same month. Saudi Aramco will sell the Arab Light crude for buyers in Asia at a US$3/bbl premium for July deliveries, an increase of US¢45/bbl compared to June 2023.The premium for the US and European deliveries has increased by US¢90/bbl, while buyers in the Mediterranean region will see an increase of US¢60/bbl. The hike in premium comes as a surprise considering ongoing demand concerns and that Saudi Arabia has been pushing for supply cuts to bring the oil market into balance.   Metals – Declining copper on-warrant stocks tighten LME spread Recent LME data shows that total on-warrant stocks for copper dropped by 17,750 tonnes – the biggest daily decline since October 2021 – for a second consecutive session to 71,575 tonnes (the lowest level in almost a month) as of yesterday. The majority of the outflows were reported from South Korea’s Busan warehouses. Meanwhile, cancelled warrants for copper rose by 18,025 tonnes after declining for three consecutive sessions to 27,375 tonnes yesterday, signalling potential further outflows. The cash/3m for copper stood at a contango of just US$4/t as of yesterday – compared to YTD highs of a contango of US$66.26/t from 23 May – indicating supply tightness in the physical market.   In mine supply, Peru’s latest official numbers show that copper output in the country rose 30.5% year-on-year (+1.2% month-on-month) to 222kt in April. The majority of the annual production gains came from the higher output levels from mines like Southern Peru Copper, the Las Bambas and Cerro. Cumulatively, copper production grew 15.7% YoY to 837.5kt in the first four months of the year. Among other metals, zinc production in the nation increased 31.4% YoY to 130.6kt in April.   In ferrous metals, the most active contract of iron ore trading at the Singapore Exchange extended its upward rally for a fifth consecutive session and traded above US$108/t this morning on speculations of more supportive steps from China to accelerate its economic growth. The recent market reports suggest that the People’s Bank of China is likely to cut the reserve-requirement ratio for banks and might also lower interest rates in the second half of the year. Meanwhile, BBG also reported that the Chinese government is preparing a new batch of measures to push growth in the property market.     Agriculture – US crop planting maintains the pace The USDA’s latest crop progress report shows that US corn plantings continue to rise with 96% of plantings completed as on 4 June, compared to 93% of planting done at this point in the season last year and the 5-year average of 91%. Similarly, soybean plantings are also growing, with 91% planted as of 4 June – well above the 76% seen at the same stage last year and the 5-year average of 76%. Meanwhile, spring wheat plantings are 93% complete. This is above the 81% planted at the same stage last season and in line with the 5-year average. Meanwhile, the agency rated around 36% of the winter wheat crop in good-to-excellent condition, up from 34% a week ago and 30% seen last year.   The USDA’s weekly export inspection data for the week ending 1 June indicated a drop in demand for US grains over last week. The agency stated that US corn export inspections stood at 1,181kt, lower from 1,346.4kt in the previous week and 1,458.5kt reported a year ago. For wheat, export inspections stood at 291.6kt, down from 391.3kt from the previous week and 355.3kt reported a year ago. Similarly, soybean export inspections fell to 214.2kt, compared to 243.1kt from a week ago and 370kt from a year ago.   The director general of the Ivory Coast's cocoa regulator, Conseil Café Cacao, stated that the domestic cocoa crop is expected to improve in 2022-23 (compared to the previous year) despite intensifying concerns about a potential outbreak of the swollen shoot virus. Ivory Coast cocoa production is stabilizing despite a slow start, taking the season's harvest projections between 2mt-2.2mt. Last week, the International Cocoa Organization (ICCO) projected an increase of 4% in Ivory Coast's cocoa output this season, reaching 2.20mt.

Agriculture – UNICA reports higher cane crush The latest fortnightly report from UNICA shows that sugar cane crushing in Center-South Brazil increased by 4.2% YoY to 48.4mt in the first half of July, as dry weather conditions boosted the harvesting pace. However, this was slightly lower than average market expectations of 48.8mt. The cumulative sugar cane crush for the season rose 10.1% YoY to 258.3mt. Sugar production rose by 8.9% YoY to 3.2mt in 1H July, while the market was expecting a number closer to 3.3mt. Around 50% of cane was allocated to sugar production in the fortnight, higher than the 47.1% allocated to sugar in the same period last year. Cumulative sugar output so far this season stands at 15.5mt, up 21.9% YoY. Cocoa futures trading in London and New York surged to multiyear highs on the back of a worsening supply outlook for the 2023/24 season. Recent reports suggest that the Ivory Coast has suspended forward sales to overseas buyers for the main crop starting in October. The move came as excessive rainfall, floods and black-pod disease undermined production. Previously, the producer also said that it had slowed the mid-crop harvest due to unfavourable weather conditions.

Agriculture – EU's wheat exports remain soft In its latest report, the European Commission revealed that the EU’s soft wheat exports for the ongoing season stood at 2.92mt as of 6 August, down by 16% compared to 3.48mt reported in a similar period a year ago. The major destinations for these shipments were Morocco, Algeria, and Nigeria. The commission added that the nation's corn imports stood at 1.39mt, down 33% compared to a year ago. Cocoa has been trading volatile recently as the weather conditions in the major cocoa-producing countries in West Africa remain uncertain, especially given the current growing season. The weather has turned favourable in some of the countries including Ghana, Ivory Coast and Cameroon with dissipating rains and increasing sunshine which could help the plants to grow and control the diseases. Nigeria witnessed some heavy showers towards the end of July that increased supply risks and supported prices.

Agriculture – Supply concerns from Africa push cocoa higher Cocoa prices made strong gains during August as supply concerns from West Africa continued to keep the market tight. London cocoa front-month contract settled at a fresh five-year high of GBP2,944/t yesterday. The weather has improved in recent weeks in West Africa including Nigeria, Ghana and Ivory Coast; however, crop development remains poor due to multiple factors including swollen-shoot disease and a supply shortage of fertilisers. Meanwhile, cocoa demand has been increasing in the US and Europe ahead of the winter and Christmas holidays.

Agriculture – Weaker Ivorian cocoa exports The latest data from Ivory Coast’s Customs Department shows that cocoa exports dropped by around 10% YoY to 1.3mt in the current season through until the end of July (the season runs from October to September). Adverse weather and the spread of the swollen shoot virus have impacted the domestic cocoa crop. Virus and disease risks remain for 2023/24 as well, which could keep supplies tight for next year. Other major African producers, including Ghana and Nigeria have also been facing similar supply issues this year with both production and exports declining. UNICA data shows that sugar cane crushing in Center-South Brazil was up 5.3% YoY to 41.8mt over the first half of September; although the pace of the crush did slow from the second half of August where we saw 46.5mt of cane crushed. Similarly, sugar production was up 8.5% YoY to 3.1mt over the first half of September. The sugar mix increased to 51.1% in 1H September, up from 50.7% in 2H August. Cumulative sugar production in Center-South Brazil has increased by 18.7% YoY to 29.3mt for the current season with 49.4% of sugar cane used for sugar production compared to 45.5% a year ago. Higher sugar prices amid supply uncertainty from India and Thailand has clearly sent the signal to Brazilian mills to favour sugar production over ethanol.

Agriculture – Weaker Ivorian cocoa exports The latest data from Ivory Coast’s Customs Department shows that cocoa exports dropped by around 10% YoY to 1.3mt in the current season through until the end of July (the season runs from October to September). Adverse weather and the spread of the swollen shoot virus have impacted the domestic cocoa crop. Virus and disease risks remain for 2023/24 as well, which could keep supplies tight for next year. Other major African producers, including Ghana and Nigeria have also been facing similar supply issues this year with both production and exports declining. UNICA data shows that sugar cane crushing in Center-South Brazil was up 5.3% YoY to 41.8mt over the first half of September; although the pace of the crush did slow from the second half of August where we saw 46.5mt of cane crushed. Similarly, sugar production was up 8.5% YoY to 3.1mt over the first half of September. The sugar mix increased to 51.1% in 1H September, up from 50.7% in 2H August. Cumulative sugar production in Center-South Brazil has increased by 18.7% YoY to 29.3mt for the current season with 49.4% of sugar cane used for sugar production compared to 45.5% a year ago. Higher sugar prices amid supply uncertainty from India and Thailand has clearly sent the signal to Brazilian mills to favour sugar production over ethanol.

Agriculture - Coffee production in Africa declines The latest data from the International Coffee Organization shows that African coffee production in 2022/23 fell by 7.3% YoY to 17.9m bags (60 kg bags), down from 19.3m bags (60 kg bags) for the previous season. The decline was mainly due to low production in Ivory Coast, where output dropped 65% YoY to 600k bags. Along with that, Uganda and Kenya coffee production also declined by 6.7% YoY and 3.9% YoY to 5.6m bags and 730k bags, respectively. The latest trade numbers from Chinese Customs show that China’s soybean imports rose 7.8% YoY to 7.9mt in November, as cheaper supplies from Brazil continued to dominate the import market share. Cumulative imports rose 13.3% YoY to 89.6mt over the first eleven months of the year.

Agriculture – Cocoa jumps on supply woes Cocoa futures trading in New York surged to fresh record highs yesterday on the back of a worsening supply outlook from the top producers - Ivory Coast and Ghana. Recent reports suggest that weather conditions and the insufficiency of fertilisers in these countries have resulted in lower output levels. Meanwhile, total cocoa arrivals at the Ivory Coast ports so far this season have dropped to 951.7kt as of 21 January, down 37% for the same period last year.   The latest data from the Indian Sugar Mills Association (ISMA) shows that Indian sugar production dropped 5.3% YoY to 15mt for the 2023/24 season until 15 January. Sugar production has been recovering over the past few weeks and the Association estimates that total sugar production for the 2023/24 season could still be higher than its earlier estimates on improving weather and higher prices for sugarcane to farmers. The Association also requested the government to allow an additional 1-1.2mt of sugar diversion for ethanol production citing sufficient availability for the domestic market. In its latest weekly report, the European Commission revealed that the EU’s soft wheat exports for the ongoing season stood at 17.4mt as of 19 January, down by 7.6% compared to 18.8mt reported in a similar period a year ago. The major destinations for these shipments were Morocco, Algeria, and Nigeria. The commission added that the nation's corn imports stood at 9.9mt, down 42% compared to a year ago. Agriculture and Agri-Food Canada (AAFC), in its first estimates for the 2024/25 season, expects Canada’s wheat production to increase 4.2% YoY to 33.3mt. The group estimates yield to rise to 3.23t/ha from 2.99t/ha, whilst harvest area is expected to decline from 10.94m hectares to 10.73m hectares for the 2024/25 season.