US Cotton Crop Improves

COTTON

December Cotton was higher overnight as the market extended yesterdays’ recovery. The US crop is in good shape, Thursday’s US supply/demand reports had a larger than expected increase in US production, and the outlook for US exports is in flux, but cotton prices have avoided a steep selloff. The Crop Progress report yesterday showed 54% of the US crop was rated good/excellent, up from 52% the previous week, 45% a year ago, and above the five-year average for this date at 46%. Texas was 46% G/E, up from 42% last week, 34% a year ago, and above the five-year average at 31%. Arkansas improved to 67% G/E from 58% last week, but was still below the five-year average of 78%. Georgia fell to 63% G/E from 71% the previous week and 66% on average. Mississippi fell to 48% from 50% the previous week and 65% on average. The latest salvos in the tariff war, including a threatened 30% tariff on Mexico have been met with indifference. Mexico is the sixth largest buyer of US cotton so far for 2024/25 at 656,000 bales. Vietnam is the largest at 2.956 million.

COFFEE

September Coffee is lower this morning after extending yesterday’s rally overnight to reach its highest level since June 30. Last week, the nearby contract fell to the 0.382 retracement of the rally from the 2001 low to the all-time high from February, and it subsequently bounced off that level, indicating the market has achieved a downside objective, of sorts. Safras & Mercado reported that Brazilian coffee producers had sold 31% of their `2025/26 coffee crop as of July 9 versus a five-year average of 38% for the period. World Weather Service sees little chance of threatening cold for Brazil’s  coffee during the next ten days. Temperatures will be a little warmer than usual, and precipitation should mostly be confined to areas near the coast. The dry weather inland should be good for harvest. Farmers in Vietnam are reportedly reluctant to sell at current levels after Brazil’s strong robusta harvest drove prices down. If the threatened 50% tariff on Brazilian imports is enacted, US coffee prices would be driven higher, and US suppliers would be sent scrambling to secure supplies from other regions. Higher US prices could pressure demand, and Brazilian sellers would have to look elsewhere. The additional Brazilian supply on the world market could drive global prices lower. Eventually this may level out as supply chains are adjusted, but any economies from proximity or established marketing relationships would be lost. This is all a big “if,” as negotiations are ongoing. There have been suggestions that high US prices this will put increased demand on ICE warehouse stocks in the US, but only about 11% of ICE stocks reside in US warehouses.

COCOA

On the whole, West Africa is seeing good growing weather. Ivory Coast farmers interviewed by Reuters said rainfall was below average last week in most of the nation’s main cocoa-growing regions, but adequate soil moisture continued to support strong flowering on plantations. They expect a strong main crop harvest, but they cautioned that weather in August and September will be critical. The main worries are overcast skies, insufficient sunshine, or excessive rain, which could trigger disease and damage yields. There were reports last week that excessive rains in June had damaged flowers and small pods, which caused some analysts to drop their forecasts for the upcoming crop, but more complete assessments should come in August and September. World Weather Service said satellite imagery and surface weather observations show seasonal rains staying to the north of many cocoa production areas. This is normal for mid- to late July, and this trend often prevails into August, with seasonal rains returning in late August and September. Second-quarter grind numbers are due out on the 17^th. The first quarter numbers showed Europe’s grind was down 3.7% from a year earlier, Asia’s down 3.4%, and North America’s down 3.0%.

SUGAR

October Sugar was higher overnight and managed to take back some of yesterday’s losses. Yesterday’s UNICA report was viewed as bullish, and the market closed lower on the day after trading to its highest level since June 30 in anticipation, as the trade apparently bought the rumor. The report showed Brazilian center-south cane crush and sugar production for the second half of June both coming in below trade expectations. Sugar production totaled 2.845 million metric tons, up from 2.450 million for the first half of the month but down from 3.269 million a year ago and below the average trade expectation from an S&P Global survey calling for 2.95 million. Cumulative production since the marketing year began has reached 12.249 million tons versus 14.285 million at this point last year, which is 14.25% behind. The drier conditions in Brazil over the past couple of weeks should benefit harvest and crushing activity for the first half of July. Brazilian harvest has a tendency to peak for the year during the second half of the month, but it is looking less likely that production has a chance to exceed last year’s levels. Elsewhere, dry conditions in southern India have lowered expectations a bit for their crop, but World Weather Service says rain prospects are improving for late this week through next week. Thailand has been drying out recently, and this trend will continue for a little while longer before there is opportunity for rain to resume. Some crop stress is expected, but the situation is not critical and timely rain is predicted for the weekend and next week.

Interested in more futures markets?  Explore our Market Dashboards here.