Dry Weather in Key Arabica Regions

COFFEE

December Coffee was higher overnight as it continued to claw back some of its losses from Friday’s selloff. There are the concerns about the 50% tariff on Brazilian imports into the US, and while that will likely raise prices for US consumers, but the effect on the global market is uncertain. Higher US prices pressure coffee demand by the world’s largest coffee consumer, which could pressure global prices. It could certainly change the way coffee is distributed. There were suggestions yesterday that exporters may to try to avoid the tariff by routing coffee through other countries first. Reuters mentioned comments by the Brazilian President that he was still open to US trade talks.  Brazil still sees no threat of cold, and conditions remain dry in the key arabica regions, which should be good for harvest. Indonesia continues to see rain, and southern India has started to get needed rain as well. Vietnam is dry but has an increased chance this week.

COCOA

December Cocoa was higher overnight and back inside the range of the past two weeks. Ivory Coast arrivals remain slow, as the market awaits the main crop, and growers there are fretting about cool conditions. Ivory Coast cocoa arrivals were estimated at 12,000 metric tons for the week ending August 3, down from 13,000 the previous week and a year ago. Cumulative arrivals since the marketing year began in October have reached 1.632 million tons, down 2.2% from a year ago. Cumulative arrivals only recently slipped below year-ago levels. Ivory Coast farmers interviewed by Reuters yesterday expressed concern over a persistent cold spell that they say could jeopardize the development of the October-to-March main crop. They indicated they need more sunshine and rain. Despite that, some growers said there was a good mix of small, average and big, almost ripe pods on trees. Ghana raised the fixed farmgate price paid to cocoa farmers by more than 4% for the 2025/26 crop season that starts on August 7 to the equivalent of $5,040 per ton. Ivory Coast is paying its farmers a state guaranteed priced of $3900 per ton for the 2024/2025 mid-crop, and they are expected to raise their price ahead of the October presidential elections.

COTTON

December Cotton is near unchanged this morning and inside the range down action from Friday. The dollar is slightly higher but well below Friday’s high, and equity prices are holding yesterday’s gains. Both are supportive to cotton. The weekly Crop Progress report left US crop conditions unchanged at 55% rated good/excellent as of August 3, which is well above the five-year average for this date at 46%. Texas fell to 46% G/E 50% last week, but this was still considerably higher than the up 33% a year ago and the five-year average of 30%. Arkansas was 71% G/E, up from 69% last week but below the five-year average of 78%. Mississippi was 48% G/E, down from 49% the previous week and below the five-year average of 62%. The report also showed 55% of the US cotton crop was setting bolls as of August 3 versus a five-year average for this date of 58%. Arkansas showed 81% setting bolls versus 90% on average (about 8 days behind), and Mississippi had 55% setting bolls versus 73% on average, about 10 days behind. World Weather Service says much of Texas will be drier than usual during the next ten days (though not completely dry), most areas will experience net drying; including West Texas. US export prospects remain a concern, as does the global demand outlook.

SUGAR

October Sugar is lower this morning, and the chart shows little support until the July 2 low at 15.44. Southern India is expected to see increasing rainfall this week which should improve late season summer crop prospects. There are some cane growing areas in the south, and there may have been some concern about the crops there. For the most part, the early arrival of the monsoon this year has been viewed as beneficial for India’s sugar crop and has supported ideas that they will be able to export sugar this year.  The Trading Corporation of Pakistan has issued a new tender to purchase 100,000 metric tons of white refined sugar this week. In July the Pakistani government approved plans to import 500,000 tons of sugar to help to maintain price stability due to a sharp rise in retail prices since January. This is the third tender after the first two failed. It also doesn’t help sugar’s bull case with crude oil prices down for the fourth straight session.

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