US Cotton Crop Getting Better All the Time

COCOA

September Cocoa was mixed overnight, but it stayed in the upper half of Monday’s range-up action. The market has managed a three-day recovery off Thursday’s low that came in the wake of surprisingly low 2^nd quarter grind data for Europe and Asia. Better than expected North American grind data supported a reversal on Friday. The demand side received some support from Lindt & Sprüngli, which  raised its organic sales growth to 9%-11% for 2025, up from a previous guidance of 7%-9%. Sales grew 11.2% organically for the first half of the year, led by 17.7% growth in Europe but limited by only 3.6% growth in North America. The growth in Europe was impressive considering Lindt raised its prices. Ivory Coast growers interviewed by Reuters yesterday were upbeat about the crop, saying many trees are flowering, with some showing small pods. They added that more sunshine is needed to boost growth. They also said that high soil moisture content was helping the crop and that there were no signs of damage. This dovetails with the recent assessments by World Weather Service, in which they have pointed to the recent, seasonal dry trend as beneficial for the crop. There are lingering concerns of too much moisture and a lack of sunshine in Cameroon and Nigeria.

COFFEE

September Coffee is near unchanged this morning after falling to its lowest level since July 11 overnight. The market managed a rally off seven-month lows, supported in part by the threat of a 50% tariff on Brazilian imports into the US, despite the lack of a clear bullish/bearish bias from that prospect. The rally did manage to correct an oversold condition, however. Brazil’s finance minister acknowledged yesterday that a trade deal with the US may not be reached by August 1, when tariff is due to take effect. Brazil awaiting a response from the US on trade proposals that were submitted in May. The fact that this tariff threat is tied to a political request (to not prosecute Brazil’s former president) could make very difficult to reach an agreement, as it does neem likely that the current Brazilian government will concede to that request. US prices will go up if the tariff is enacted, Brazilian coffee sales to the US will go down, the US will look for other suppliers, and Brazil will have to find other markets. There were reports yesterday that Brazilian robusta growers were offering their recently-harvested lots at significant discounts relative to robusta from Vietnam.

COTTON

The weekly Crop Progress report showed US cotton crop conditions improved again last week, with 57% of the crop rated good/excellent as of July 20, up from 54% the previous week and 53% a year ago. The five-year average for this date is 48%. Texas was 52% G/E, up from 46% last week and 34% on average. Georgia and Arkansas also improved, but Mississippi slipped. The weekly report also showed 33% of the US crop was setting bolls, down from 40% a year ago but right at the five-year average. Not surprisingly, the Delta states were behind. The above average monsoon in India has accelerated the planting of summer-sown crops, including cotton. The country has so far received 6% more rainfall than normal since the start of the season on June 1, which helped farmers to plant summer crops on 70.83 million hectares (175 million acres) by July 18, up 4.1% from the last year. However, the cotton area was 3.4% lower from a year ago.

SUGAR

Bloomberg reported yesterday that India plans to allow sugar exports next season to avoid a surplus, as early signs suggest a bumper cane harvest, this according to an unnamed official. The official added that the crop looks promising across key producing regions, helped by higher acreage and ample rains. India is the world’s second largest sugar producer. The nation already took steps to allow some exports this year after restricting them the previous two years. India’s National Federation of Cooperative Sugar Factories Ltd. predicts a production jump of 19% in 2025/26. India has received 374 millimeters of rains so far this monsoon season, which runs from June through September, up from a normal amount of 351.7 millimeters, according to India Meteorological Department on July 21. Rainfall in the northwestern region was at 29% above normal, while the eastern and northeastern region got 23% below normal rains.

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