Hot Texas Weather May Benefit Cotton Crop

COTTON

December Cotton traded to its highest level in over a week yesterday on some bullish export news, but the market is still following the consolidative, sideways pattern that it has been relegated to since spring. US crop conditions are strong, and US exports are slow. There has been some positive news on the trade front, and there is some hope that the August 12 tariff deadline with China could be extended another 90 days when Treasury Secretary Bessent meets with the Chinese Vice Premier in Sweden next week. The weekly Export Sales report yesterday was mildly supportive, as it showed net sales of 132,624 bales for 2025/26, the largest new crop sale since June 12. Shipments totaled 184,000, the highest since July 3, and they have certainly kept pace with sales, which limits the amount of old crop to be carried over to new crop. World Weather Service says net drying conditions are likely in most cotton production areas in the southern Plains from southwestern Kansas into southern Texas during the next week. A few showers and thunderstorms are expected, but resulting rain will not be enough to counter evaporation. West Texas and the Texas coast may do best with rainfall in the second half of next week. Warmer temperatures will increase heat units for cotton which is needed after recent weeks of cooler biased conditions. A weak frontal system will push across Texas in the August 4-7 period and possibly generate some rain and thunderstorms, but rain intensity is expected to be mostly light.  Recent showers in West Texas were welcome, although greater rain that is better distributed is still needed. US Delta crops will likely dry down in the coming week while temperatures trend warmer, which may benefit cotton in many areas.

COFFEE

Robusta prices firmed slightly this week in Vietnam as farmers were reluctant to sell at the low prices. This comes after newly harvested crops Brazil and Indonesia pushed nearby London (robusta) prices to their lowest level since April 2024. September New York (arabica) coffee was inside the upper part of yesterday’s range overnight, and the market is close to the July 18 high. The weather in Brazil is been dry and free of frost. The dry weather should help advance the arabica harvest, which appears to be running behind last year. This week Cooxupe reported that its farmers had harvested 59% of their expected 2025 crop as of July 18, up from 49.3% in the previous week but below the 67.7% reported at the same time last year. World Weather Service expects limited rainfall for Vietnam, but Indonesia should see some showers return this weekend and next week after an extended period of drying. The 50% tariff threats against Brazil certainly add to uncertainty in the market, as their implementation would raise prices to the US and leave Brazilian growers looking for buyers. US gets about 1/3 of its coffee from Brazil. The contract has deliverable locations in the US and Europe, and most of the stocks are in Antwerp, Belgium. There has been no indication of progress in the negotiations, though last week some representatives of the Brazilian  coffee industry were expressing hope. September Coffee put in a low the day the tariffs were announced.

SUGAR

There seems to be some interest developing in physical sugar now that prices have fallen to their lowest level in 4 ½ years. European traders told Reuters that the Trading Corporation of Pakistan has issued an international tender to purchase 100,000 metric tons of white refined sugar. The government has approved plans to import 500,000 tons of sugar to help to maintain price stability. Pakistan reportedly received no offers in a previous tender to buy 50,000 tons of on July 22, with traders saying the requirement to load shipments between August 1-15 was too short notice for realistic offers. The sugar can be sourced from optional origins but not India or Israel. Dealers also told Reuters that demand in the physical market, with Pakistan, the Philippines and Iran among potential buyers, had helped to reduce the front month’s discount to March during the last few days. Brazil’s Cane Technology Center said sugar content in the cane of this year’s crop up to the end of June was 3.1% smaller than last year to 125 kilograms per ton of cane, while agricultural yield is 10% smaller at 79.3 tons of cane per hectare. The next UNICA report on Brazilian sugar production (for the first half of July) is due out next week. Dry conditions this month have been conducive to harvest and crushing. Production usually peaks for the year in the second half of July. World Weather Service says Central Thailand soil moisture is improving, although still running short to very short. Some improvement is possible this weekend and next week. Center west and center south Brazil may experience a greater and more widespread rain event at the end of next week and into the following weekend that could have an impact on center west and center south crop areas, but confidence is low.

COCOA

September Cocoa traded to a new high for the move yesterday but closed lower on the day on what could be a reversal from this week’s rally. The market fell to its lowest level since November last week in the wake of low 2^nd-quarter grind numbers form Europe and Asia but then embarked on a recovery rally that saw a 19% gain in six sessions. There was a story yesterday in Reuters that small players in Ivory Coast’s cocoa industry fear they will go out of business due to the cost of complying with EU regulations on the import of commodities linked to deforestation, which require full traceability of the crops. However, the story went on to say that two sources at Ivory Coast’s Coffee and Cocoa Council said around 900,000 out of 1 million cocoa farmers had already received their digital ID cards, which suggests that most of the nation’s producers are prepared. However, cooperatives and small local exporters are concerned they will not be able to compete with Western multinational companies, which have better financial and human resources to handle the additional cost and workload. A second source said the new system, which was tested on a sample of producers, cooperatives and exporters, would be rolled out and become mandatory from October 1. The EU delayed the launch of the law by a year, to this December. Record cocoa prices last year appear to be sparking an expansion in production. Brazil’s biggest conilon (robusta) coffee cooperative, Cooabriel, is launching a cocoa pilot project in the country’s Bahia state that would produce around 10,000 60-kilogram bags of cocoa beans. Uganda’s cocoa production is expected increase 29% this year from 2024, helped by expanded crop acreage where new trees are starting to come to fruition

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