Modest Changes Expected for USDA Supply/Demand

COTTON

December Cotton is back near the bottom of that four-week trading range, but there may be a reluctance to push to much lower ahead of the USDA monthly supply/demand report tomorrow. The trade is not looking for any substantial change, particularly for the US numbers, with the critical Acreage report to be released at the end of the month. Last year’s report had no changes in US numbers for June, except for a revision higher in beginning stocks. For tomorrow’s report, a Bloomberg survey has an average trade expectation for US 2025/26 cotton production at 14.63 million bales (range of 14.05-16.14 million), which would be up from 14.50 million in the May update. US exports are expected to come in around 12.58 million bales (range 12.25-13.50), up from 12.50 million in May. Ending stocks are expected to come in around 5.02 million bales (range 4.02-5.43), down from 5.2 million in May. World production is expected to come in at 117.71 million bales (range 117-119 million), up from 117.81 million in May. Consumption is expected around 117.78 million versus 118.08 million in May, and ending stocks are expected at 77.88 million (range 77-78.88 million), down from 78.38 million in May. The US/China talks concluded with both sides saying they had achieved some agreement, but details were scarce. Equities were near unchanged overnight, but if that changes, cotton could follow. US cotton weather is generally favorable, with West Texas seeing needed rain recently. The biggest problem is too much moisture in the Delta which is slowing plantings.

COCOA

September Cocoa extended yesterday’s selloff overnight but found support at the 50-day moving average. Rabobank’s comments yesterday that crop prospects for the 2025/26 season were improving after recent and forecast rainfall in West Africa was bit of bearish news following some mixed reports from Ivory Coast farmers this week. The dry conditions earlier this year has likely caused problems with the early mid-crop, and recent rainfall is expected to support production later in the season, but the slow pace of Ivory Coast port arrivals is a concern. World Weather Service says a routine occurrence of showers and thunderstorms will continue across portions of west-central Africa during the next week.  All crop areas will be impacted at one time or another and sufficient amounts will occur to maintain or possibly bolster soil moisture for the long term. ICE exchange stocks were down 3,157 bags yesterday to 2.257 million after reaching their highest since September 17 on Monday. , when they were at 2.262 million. This was the first session stocks declined since May 20.

COFFEE

July NY Coffee is near unchanged this morning after a reversal lower yesterday. The market saw steady pressure in May after trading to contract highs in late April, partially a correction from an overbought condition but also due to lower robusta prices, which were under pressure from the advancing harvest in Brazil and Indonesia. The Brazilian arabica harvest is not as far along as robusta, but it is advancing on pace. The 2025 arabica crop will be smaller than last year, but that does not rule out additional pricing pressure as the beans arrive. The Brazilian real has reached its highest level in a year, which may discourage selling to some degree. Brazil’s largest coffee cooperative, Cooxupe, reported yesterday that farmers had harvested 13.7% of their expected 2025 crop by June 6, up from 10.1% the previous week and in line with the 13.6% at this point last year. They produce arabica beans. As of last week, the entire Brazilian robusta harvest was estimated to be around 40% complete, while the arabica harvest was around 21%, both below average by one or two percentage points.

SUGAR

July Sugar is higher this morning after failing to take out Friday’s low overnight. The UNICA report on Brazilian Center-South sugar production for the second half of May should be released tomorrow or Thursday, and traders will be watching it to see if and by how much production recovered during the period after the slow start. Too much rain hindered activity in April, and the drier conditions in May are expected to have help move harvest and crushing along. An S&P Global survey of analysts showed an average expectation calling for sugarcane crushing in to be +1.2% from the same period last year at 45.91 million tons and for sugar production to be +4.7% to 2.84 million tons. The early arrival of the monsoon in India and SE Asia have boosted expectations for India and Thailand’s crops.

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