March Cotton Hits New Lows

COTTON

March Cotton fell to new contract lows overnight, and the nearby contract fell to its lowest level since April 4, its low in the wake of the “Liberation Day” tariffs. The market was apparently not impressed enough by the export sales report yesterday to stem the selling. Sharply lower crude oil prices overnight make cotton less competitive with man-made fibers, and weak equity markets are viewed as bearish for cotton demand in general The dollar has reached its highest level since May, which does not bode well for US exports. Weak soybean prices contribute to a negative tone. Yesterday’s export sales report showed the US sold 198,985 bales of cotton for the week ending October 2, down from 199,506 the previous week. Cumulative sales for 2025/26 have reached 4.413 million bales, down from 5.055 million at this time last year and the lowest since 2015/16. Sales have reached 39% of the USDA forecast versus a five-year average of 56% for this point in the marketing year. The biggest buyer that this week was Vietnam at 104,349 bales, followed by Pakistan at 28,018, China at 26,471, and India at 12,954. The total number may have been disappointing relative what some may have been hoping for, but its wasn’t a disaster. The fact that China and India were buyers may offer some comfort, but the amounts were small relative to Vietnam.  The next update will be on Tuesday November 25, and it will cover the week ending October 9. World Weather Inc says two storm systems will move through the southern U.S. Plains (very unusual for La Nina events) producing rain in cotton and southern wheat production areas during the coming week resulting in some cotton fiber quality decline.

COCOA

March Cocoa is lower this morning, but it has managed to hold above Wednesday’s one-year lows for the past two sessions. The fundamental outlook may have turned bullish for a change after reports yesterday that sources inside the Ivory Coast’s regulator, the Coffee and Cocoa Council, say that the crop will continue to struggle this year. The sources worry that about additional drought risks with the approach of the dry season in December through April, when the Harmattan winds come in from the Sahara, something which we will be hearing about in the next few months. Up to now, the market has been focusing on mostly rosy reports of output from West Africa, good weather, and the lifting of tariffs on cocoa exports from Ecuador. Weekly arrivals have picked up substantially over the past three weeks, but the cumulative number is still about 6% behind last year. ICE stocks fell 1,436 bags yesterday to 1.739 million, their lowest since March 17.

COFFEE

March Coffee gapped lower overnight and fell to its lowest level since September 25 on news that President Trump had removed the 40% tariffs on Brazilian coffee imports, which had been straining US supply since the tariff was imposed in August. Up until the tariff was levied, Brazil coffee represented about one-third of US coffee consumption. This move is expected to open up supply to the US market. World Weather Inc has a mix of rain and dry weather for arabica growing regions in Brazil, which is good for the 206/27 crop. Recent flooding in Vietnam has raised concerns about their harvest. Most of the damage has been reported near the coasts and away from the key growing areas in the Central Highlands, but some damage may have occurred.  ICE certified stocks fell 1,678 bags yesterday after increasing for the first time in three weeks on Wednesday. Stock levels are hovering near their lowest since March 2024.

SUGAR

March  Sugar is slightly higher this morning after testing support at the 9-day moving average overnight. Key resistance remains at the 15.05 level, a double top from last week and earlier this week. The trade may be turning a bit bullish with the increased rainfall in Brazil’s Center-South. The rains should benefit next year’s crops, buy they could bring an end to the harvest/crushing season if they continue into the rainy season. This would leave some of the mature crop to be crushed at the start of the next season. Earlier this week Bloomberg reported that Thailand expects to crush 93 million tons of cane in the 2025/26 production year that starts December 1. (They were citing Thailand’s Office of the Cane and Sugar Board.) This would be up 1.9% from 2024/25. The Indian government is reportedly considering an increase in the floor price for sugar as well as in increase in the ethanol price in order to shore-up their sugar processors. The Indian government has increased the sugar export quota it to 1.5 million metric tons from 1.0 million this year, but some processor’s groups have suggested that there could be room for 2.0-2.5 million tons, based on production forecasts. However, some analysts have lowered their forecasts somewhat due an overabundance of rain that reduced sugar content.

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