Stucco encases rotting siding that I’d like to replace

[Aeromechanick]

Hello everyone, first post here. I hope you are all well and good wherever you are.

I’m about to remove and replace my siding and exterior trim with a more long term solution compared to the cheap and rotting material the house was built with.

I’m curious how I should handle a building peculiarity on my home, the sophets are stucco material and they but directly up with the highest siding sheet around my home. There seems to be no way to remove the top run of siding because the top fasteners are obscured with stucco.
Will I need to cut the stucco back and patch it after installation of new siding?
Pics attached.
Many thanks

 

[joecaption]

#1, That's not stucco, It's panels that just look like stucco.
#2, Where's the pictures of the rot?
Your siding looks like Smart Side, the only time I've seen it fail is if it was installed to close to grade.

 

[Aeromechanick]

#1, That's not stucco, It's panels that just look like stucco.
#2, Where's the pictures of the rot?
Your siding looks like Smart Side, the only time I've seen it fail is if it was installed to close to grade.

It’s soaking up water like a sponge in limited but present areas. I was going to go to a cement based product for the resto because we live in a high fire hazard area.

 

[Aeromechanick]

Appreciate the intel on it being board with a stucco coating. That being said, to get to the top row of nails and siding attachment point, would I need to cut that stucco coated board back? Seems obvious, but just confirming