July Cotton Higher Ahead of Export Report

COTTON

The appeals court temporarily reinstating the Trump tariffs yesterday after a previous could had ruled against them the day before adds to the uncertainty of the US export situation. July cotton drifted lower overnight, but it is slightly higher this morning ahead of the export sales report. Last week’s report showed US cotton sales for the week ending May 15 at 141,428 bales for the 2024/25 (current) marketing year and 7,392 for 2025/26 for a total of 148,820. So far, 2025/26 sales are starting off evens slower than 2024/25. Last week’s new crop sales were the lowest since January 9, and outstanding sales for 2025/26 had reached just 1.284 million bales, which was the lowest new-crop total for this point in the season in 11 years. US plantings are a bit behind, mostly because of saturated soils in the Delta, but there has been little impetus to develop a weather premium. Texas receiving welcome rains this week, and more is expected over the next week or so. The Delta may see some relief from rains next week, and there is a possibility that a ridge will develop during the second and third weeks of June hold off the rain and help dry soils.

COCOA

July Cocoa was higher overnight on a wave of short covering after the market had sold off $2,226 (20%) in just seven sessions. The weather in West Africa has shown a good mix of rain and sunshine over the past few weeks, easing concerns about mid-crop production. Ivory Coast port arrivals continue to lag, and it was telling that the market continued its pushed lower this week despite a another low arrivals number. The weather in West Africa is good for pod development and should help the crop later this summer. World Weather Service expects little change in the weather through the next week. Scattered showers and thunderstorms will occur routinely. The precipitation will vary greatly in coverage and significance each day, but all areas will eventually be impacted.

COFFEE

July London (robusta) coffee extended its decline overnight to reach its lowest level since December 4, and the July (NY) contract fell to its lowest level since April 11. The robusta market is has led the complex lower, as new-harvested crops in Brazil and Indonesia are pressuring cash prices. The Brazilian arabica harvest is behind the robusta, and the conditions of this year’s crop is still uncertain. A smaller crop is expected, but several agencies and firms have revised their forecast higher from where they were earlier this year. Early reports from brokers have suggested good bean size but lower yields. As the robusta market led arabica higher last year, it is leading it lower this year. Last year, a tight robusta supplies narrowed the premium that arabica prices normally hold over arabica to the point where roasters were substituting arabica beans for robusta. Both markets have reached deeply oversold levels, leaving them vulnerable to short covering, with the situation more pronounced in the robusta market. A cooler trend is developing in Brazilian coffee areas, but at this point there is no threat of crop-damaging cold (at least through June 8, according to World Weather Service).

SUGAR

July Sugar was higher overnight after trading to its lowest level since January yesterday. Yesterday’s UNICA report was bearish against expectations, but the market quickly absorbed that information and managed a higher close on the day. The UNICA report showed a smaller decline in Brazil Center South sugar production from a year ago than expected, with production at 2.408 million metric tons versus expectations of 2.2 million. The cane crush was lower than last year but higher than expected, and sugar’s share of crushing was higher than last year. Heavy rains were the reason given for the slowdown in the Brazilian harvest during the second hall of April, and some rain is forecast for Center South Brazil in the coming week, which could slow the harvest pace again.

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