Cotton Market Received Support From The Demand Side

COTTON

Cotton market received support from the demand side of the market on Friday after Gap Inc. reported that it plans to double it use of US-grown cotton by 2026, and this may have fed a short-covering rally overnight. Friday’s export sales report was hardly bullish, as total sales were down from the previous week’s already low number, but at least new-crop sales recovered to 13,822 bales from the dismal 7,392 bales the previous week. Cumulative sales for 2025/26 have reached 1.298 million bales, which is the slowest start for new crop sales in at least 12 years.

Most cotton areas remain drought-free. The US drought monitor showed that as of last Tuesday, approximately 7% of US cotton production was within an area experiencing drought, down from 8% the previous week. Overnight, World Weather Service reduced the rainfall expected for West Texas rainfall over the next ten days, but scattered showers are still expected. Southeastern U.S. rainfall has been reduced once again for the coming week. Field conditions in the Delta are still too wet, and more rain is expected in the north over the next ten days.

COCOA

The cocoa market was higher on Friday and again overnight after the ICCO tightened it supply estimates for 2023/24 in a quarterly update on Friday. In the report, world 2024/25 cocoa production was revised down to 4.368 million metric tons from 4.489 million in the first quarter update. Grindings were revised to 4.818 million from 4.885 million previously, putting the global deficit at 494,000 tons, up from 441,000 previously. The result was a 66,000-ton decline in 2023/24 global ending stocks to 1.270 million tons from 1.336 million previously. ICCO provided no updates for 2024/25, but the lower ending stocks does imply a similar, 66,000-ton decline in ending stocks for 2024/25 from the first quarter forecast. Ivory Coast 2024/25 production was left unchanged, but Ghana’s was lowered to 449,000 tons from 530,000 previously, with Ecuador’s lowered to 419,000 from 430,000 and Brazil’s to 182,200 tons from 200,000. The ICCO said they are reviewing the methodology it uses for forecasts and long-term projections, which may be why they provided no updates for 2024/25.

COFFEE

July Coffee extended its recent selloff overnight and fell to its lowest level since April 9, the day it put in a spike bottom. The market has been moving steadily lower since putting in a contract high April 29. Brazil’s robusta harvest is advancing, and growers are reporting strong yields. A drop in Vietnam cash prices last week was attributed to pressure for Brazil and Indonesia. This ample supply in most evident in the July London robusta futures, which have fallen to their lowest level since December, and they seem to be leading the NY market lower. Safras & Mercado said today that Brazil’s 2025/26 coffee harvest was 20% complete as of May 28, down from 22% a year earlier, but that would include arabica as well. The president of Brazil largest Conilon (robusta) coffee cooperative in the state of Espirito Santo estimated that around 25% of their total harvest had been completed and that they are anticipating a large harvest. He also said that unseasonable rainfall during the current harvest is not an issue. World Weather Service said Brazil coffee areas trended cooler late last week and early in the weekend, but no frost was detected in key production areas and none expected in the next 10 days.

SUGAR

July Sugar is higher this morning, perhaps on the stalling of the Indian monsoon after its early arrival last week. There have also been reports that buyers in China reemerged on the recent price weakness. The global weather pattern looks a bit less bearish than it did last week. Rainfall in India is expected to be subdued for a few days, but the monsoon expected to strengthen around June 11 or 12 and start covering the remaining parts of the country. World Weather Service said Drier conditions are emerging in northwestern and central Sumatra, Indonesia and are expected to continue to do so over the next ten days and that the sugarcane could become stressed as dryness becomes more significant later in June. Brazil sugarcane areas will trend cooler periodically in the next ten days to two weeks, but there will be no risk of crop damaging cold. Last week’s UNICA report showed a smaller decline from a year ago than expected in Brazil’s Center South sugar production during the first half of May, with production at 2.408 million metric tons versus expectations of 2.2 million. Cumulative sugar production since the season began on April 1 is running about 23% behind a year ago, but it is expected to improve as the season continues. Friday’s Commitments of Traders Report showed managed money traders were net sellers of 13,173 contracts of sugar for the week ending May 27, reducing their net long to 5,629.

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