Brazil Coffee Boom Pressures Prices

COFFEE

December Coffee was lower early Tuesday but was respecting Monday’s two month low. ICE stock levels remain low, but the market is being pressure by reports of strong exports out of Brazil and good growing weather for the 2027 crop. Brazilian government data indicated the nation’s green coffee exports for the first two weeks of September averaged 13,500 metric tons per day (225,000 bags) , up 51.5% from the daily average for the entire month of September 2025. Cecafe reported last week that Brazil exported 3.82 million bags of green coffee in August, +31.7% from last year and a new record. Arabica coffee exports totaled 2.87 million bags, +25.7%. Brokers and traders have told Reuters that traders were planning to deliver at least 300,000 bags of arabica coffee against the December contract. Recent rainfall in Brazil growing areas is viewed as supportive to flowering for the upcoming crop. Reuters reports that soil moisture in South Minas Gerais in Brazil was the best in at least seven years.

SUGAR

March Sugar was lower early Tuesday and was barely holding above Monday’s lows. It was also just barely holding 21-day moving average support at 18.87. A large net long held by the funds leaves the threat of long liquidation selling over the market. The French farm ministry has put the nation’s 2026 beet production at 25.4 million metric tons, down 29% from last year and the lowest in ministry records dating back to 1980. Data from the United Nations’ Food and Agriculture Organization showed the beet crop would be the lowest since 1978. This is not a shock to the market, as lower plantings this year and the extreme heat and drought this summer were already pointing to such a result. The former head of sugar operations at Wilmer International spoke of the potential for a “super bull” market in sugar this year, citing problems with El Nino, shrinking stocks in India, expected lower production in Thailand, and lower Brazilian output.  They believe the last third of the sugar crop in Brazil will likely be affected by too much rain.  India has had uneven monsoon rains. The government has allowed 1 million tons of duty-free imports this year, and so far importers have applied for permits covering 800,000  tons. Thailand production is down as well because of farmers switching to Cassava. Last week, the  Thailand Office of the Cane and Sugar Board put said they expected the nation’s 2026/27 sugar production to fall to 10.5 million metric tons, down 12.5% from 2025/26.

COCOA

December Cocoa was moderately lower early Tuesday, inside the range of the past six sessions. The market is awaiting arrivals for the main crop, and there are concerns about a rainfall shortages in Ivory Coast as well as the new process for deliveries in that nation that were designed to comply with the EU’s traceability rules. Ivory Coast farmers interviewed by Reuters expressed concerns about below-average rainfall last week, worrying that if it continues it will shorten the main crop season. Harvesting remains limited and bean volumes leaving farms are not yet significant, farmers said. They expect harvesting to accelerate in October, when deliveries to buyers should increase. There were no arrivals at ports for the first week of the 2026/27 marketing year, which started on September 1, but by September the 13^th, they reached 26,000 tons. Last year, the marketing season started in October, and arrivals reached 48,000 tons by October 12. September is typically a quiet month for cocoa production and trading in Ivory Coast, so seeing 26,000 tons already arriving was viewed as good news by the CCC. World Weather Inc. expects light to moderate rain in most cocoa production across West Africa over the next week to ten days. Ivory Coast will need more. Long term moisture deficits are unlikely to go away, but there will be at least some precipitation for crop development during the forecast period.

COTTON

December Cotton extended the recent selloff early Tuesday and fell to its lowest level since August 14. The weekly Crop Progress report released Monday afternoon showed the a modest improvement in US cotton crop conditions last week, which likely added to the selling pressure. The market has already dropped 10.06 cents (9%) from its peak on August 31. The fund net long was still close to record levels as of last Tuesday (per COT reports) leaving the market vulnerable to selling. The US dollar reaching its highest level in two weeks yesterday adds to pressure on the market as well. The Crop Progress report showed 36% of the US cotton crop was rated good/excellent as of September 13, up from 34% the previous week but down from 52% a year ago and below the five-year average of 44% for this date. Texas was 18% G/E, up from 16% last week but down from 47% a year ago and the five-year average at 32%. The report also showed 57% of the US cotton crop had bolls open, up from 40% the previous week, 49% a year ago, and a five-year average for this date of 48%.  Texas had 55% with bolls open versus a five-year average of 34%. 8% of the crop was harvested, which is right on the average pace, indicating harvest pressure could be starting. The early advancement of the crop indicates means rains can do more damage than help at this point.

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