Strong Cotton Sales Fail to Spark Rally

COTTON

March Cotton was slightly higher early Friday following a weak close on Thursday. The market’s lackluster reaction to what could be judged as a strong export sales report on Thursday morning was disappointing for the bulls. The report showed USDA cotton export sales for the week ending January 8 at 339,724 bales for the 2025/26 er (current) marketing year and 10,120 for 2026/27 for a total of 349,844. This was up from 120,522 the previous week and was the highest since November 6. It was the third time sales came in above 300,000 bales this marketing year and the second time in five weeks. Cumulative sales for 2025/26 have reached 62% of the USDA forecast for the marketing year versus a five-year average of 78% for this point in the season. The 300,000+ number is good, but there will have to be more of them to make up for the lag, otherwise USDA may lower its export forecast, which would push ending stocks higher. The largest buyer this week was Vietnam at 349,844 bales, followed by China at 127,402. It may be a bit early in the season to worry about this, but the latest US drought monitor showed 80% of cotton production was in an area experiencing drought, including much of West Texas.

COCOA

March Cocoa was higher early Friday after falling to its lowest level since October 2024 on Thursday, perhaps because the Asian and North American grind data, which were released after the close on Thursday, were not as not as dismal as the European data. Asia’s fourth-quarter grind, which was released early Friday came in at 197,000 metric tons, down 4.82% from the same period in 2024, according to data from the Cocoa Associationof Asia (CAA). The North American Grind, released late Thursday, came in at 103,117 tons, up 0.35% from the same period in 2024 (data from the National Confectioners Association). This was the second straight quarter the North American grind was above year-ago levels, though the fourth-quarter increase was not as impressive as the 3.2% increase in the third quarter. The European fourth-quarter grind, which the market responded to on Thursday, was worse than anticipated, falling 8.3% from a year earlier to 304,470 metric tons, bigger than the 4.8% decline in the third-quarter. A poll Bloomberg of traders and analysts ahead of the report had an average expectation of -3%. Total grind for 2025 was 1.327 million tons, down 5.9% from 2024 and the lowest annual grind since 2015. The European grind was a 21-year-low for the fourth quarter. World Weather Inc. says showers in West African may be a little more numerous during the next week compared to that of the past few days, but no general soaking rain is expected. ICE cocoa stocks increased by 1,732 bags on Thursday to 1.680
million, highest since December 5.

SUGAR

March Sugar was higher early Friday after bouncing off a four-week low on Thursday. The market may be garnering some support from a frost/freeze situation in Florida overnight, but it may also be that sellers are getting frustrated with the lack of downside follow-though despite ample supply. Citrus and cane growing areas of Florida saw some of their coldest temperatures of the season Thursday night. World Weather Inc. does not believe temperatures were not low enough for long enough time to induce permanent crop damage (to citrus),
but they do expect additional bouts of cold early next week and again later this month that will plague citrus and sugarcane areas in the southeastern US. Crude oil prices were higher early Friday after a steep selloff on Thursday, and this lends some psychological support to sugar. Germany’s second-largest sugar refiner, Nordzucker, said on Thursday that it would see an annual operating loss due to low sugar prices in the EU. Reuters reported on Wednesday that European producers are asking farmers to cut sugar beet plantings. Last week’s Commitments of Traders report showed managed money traders were net short almost 150,000 contracts. This is less burdensome than the 205,000 they were net short in November, but it is still significant and it poses a short covering threat if resistance levels are violated.

COFFEE

March Coffee was higher early Friday after bouncing off an eight-session low on Thursday. Crop concerns are minimal, and there continue to be reports of slow sales to the US last year because of the tariffs, which suggests there could be a supply holdover from the 2024/25 crops. For example, Guatemala’s National Coffee Association (Anacafe) reported this week that the nation exported 2.86 million bags of coffee for the 2024/25 harvest, 9% lower than the previous cycle, due to the US tariffs, and some of that inventory is expected to carry over into
the next cycle. Guatemala exports 42% of its coffee to the US. World Weather Inc, expects all of the major coffee areas of Brazil to be impacted by rain at one time or another over the next eight days, which should be beneficial for cherry development. Dealers told Reuters this week that farmers Vietnam appeared reluctant to sell (robusta beans) at current prices. ICE certified arabica stocks were unchanged Thursday at 449,322, their lowest since December 22

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