December Coffee Steadies on Tariff Hopes

COFFEE

December Coffee was higher overnight but still consolidating inside the range of the past month. There is some optimism that the 50% tariff on Brazilian coffee could be reduced if and when the President Trump meets with the Brazilian president, but no date for the meeting has been set. In the meantime, ICE exchange stocks continue to decline. They fell a modest 471 bags yesterday to 534,665, their lowest since March 19, 2024. Stocks have fallen in 20 of the last 21 sessions. Colombia’s coffee production for the 2024/25 marketing year (which ended in September) totaled 14.87 million bags, up 17% from the previous year, according to the Colombian coffee federation. This was their best crop in 33 years. Exports rose 12% to 13.3 million bags. A smaller crop is expected for 2025/26 due to the biennial nature of arabica production. The sharp increase in Brazilian coffee exports to Colombia have sparked concerns that unscrupulous exporters will mix cheaper Brazilian beans with Colombian beans. Recent rainfall in Brazilian coffee areas have eased concerns about the upcoming crop, but for the most part the rains have been slow to arrive. There are also concerns that conditions are getting hotter, but World Weather Inc says this is normal ahead of monsoon moisture. Greater rain is expected next week and into late month as the monsoon pattern kicks in.

COTTON

December Cotton took out its April 4, post-tariff-announcement contract low overnight. Lacking the crop progress report this week, the trade has little reason to doubt that the harvest is proceeding at a normal pace. World Weather Inc did say some interruptions to fieldwork would result from rain in the northern Delta and in portions of the Southeast this week but that most of the rain would not heavy enough to cause lasting delays or serious declines in quality. Rains this week may have also caused some interruption to harvesting in western and central parts of West Texas and the Panhandle, but dry and favorable conditions are expected through much of the next two weeks. The nearby Dollar Index reached its highest level since mid-August overnight, which reduces the competitiveness of the US cotton on the global export market. The government shutdown leaves the market without a weekly export sales report and therefore any data to suggest the US export sales pace is improving. For the monthly USDA supply/demand report, which was supposed to be released on Thursday but is looking less likely, a Bloomberg survey shows an average trade expectation calling for US 2025/26 cotton production to come in at 13.26 million bales (range 13.00-13.65 million) versus 13.22 million in the August report.  The last export sales report released before the shutdown showed Pakistan was the second largest buyer of US cotton for the 2025/26 marketing year (so far) at 472,000 bales out of a total of 4.059 million. Vietnam was the largest at 975,000.

COCOA

December Cocoa is lower this morning and it has tested Monday’s 11-month low. Harvest pressure and concerns that the 3^rd quarter grind data for Europe, Asia and North America will show a steep drop from 2024 have pressured the market. That data is due to be released on October 16. Bloomberg’s reports from West Africa have growers in Ghana and Ivory Coast encouraged by the weather conditions. There are still concerns about black pod disease in Cameroon, and farmers in Nigeria are complaining about low farmgate prices. Ivory Coast is the largest cocoa producer in the world at 38%, and Ghana vies with Ecuador for being the second largest (10-12%). The three of them combined make up about 60% of global output. World Weather Inc. says sufficient rain is expected during the next week to ten days to maintain a favorable environment for coffee and cocoa development. Showers and thunderstorms will occur frequently, although not all areas will get rain each day.  The entire production region from Ivory Coast to Cameroon and Nigeria will be impacted with precipitation at one time or another during the forecast period with many areas getting rain multiple times.

SUGAR

Bloomberg reported that Covrig Analytics is forecasting a global sugar surplus of 4.1 million metric tons in 2025/26, 100,000 tons smaller than their previous estimate. They did mention a potential risk to next season’s Brazilian production from dry weather. The look for India to export 1.5-2 million tons in the first quarter of 2026 with no additional exports expected for in 2025. (Indian sugar producers have asked for a 2 million ton allowance for 2026). Asia’s 2025/26 deficit is seen at 8 million tons, down from 16.1 million in 2024/25. The European situation “remains tight” in 2025/26 due to lower beet acreage in the European Union and Ukraine. The EU’s 2024/25 deficit was cut to 700,000 tons from a prior estimate of 1.3 million. There was another story yesterday that mentioned the decline in US sugar consumption due the rising popularity of GLP-1 weight loss drugs. DTN weather report say recent showers in Sao Paulo, Brazil have been favorable for growth and that they may increase again this week.

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