Brazil Rains Lift Coffee Prices

COFFEE

September Coffee extended its rally overnight, reaching its highest level since May 13. Recent rains in Brazil have slowed what was expected to be a bumper harvest, and it has interrupted drying activity as well. There were reports that rains had soaked beans that were left out for drying, which would expose them to mold. Cooxupe, Brazil’s largest coffee co-operative, said on Wednesday that its farmers had harvested 15.8% of their 2026 crop as of June 14, versus 17.8% a year ago and 26.6% at this point in 2024. El Nino is being blamed for the heavier than normal rain. El Nino can bring dry conditions later this that could cause problems for next year’s crop. It brings warmer temperatures during the southern hemisphere winter, it could help coffee trees avoid damaging frosts. El Nino could be a problem for robusta production as well, as it tends to bring dry conditions to Vietnam and Indonesia.

COCOA

After trading to its highest level since May 27 on Wednesday, September Cocoa backed off and gapped lower on the open Thursday, with traders clearly disappointed with the market’s failure to take out that high from the 27^th. Concerns that El Nino will reduce cocoa production this year have supported the rally. El Nino tends to disrupt normal weather patterns, bringing unusually dry conditions to west Africa and excessive moisture to Ecuador. This event is expected to be strong, with the possibility of it becoming a “super” El Nino that could be the strongest on record going back to 1950. World Weather Inc. has warned about reading too much into this, however. Some lower than normal rainfall in recent weeks has started to reduced expectations, though growers stated this week that soil moisture was adequate.

SUGAR

October Sugar was near unchanged early Thursday following a two-day rally off a two-month low. Sharply lower crude oil prices this week have undercut one of the supportive factors for sugar – the expectation for cane growers to focus more of their activity on ethanol production and less on sugar. Data from the Brazil’s Agriculture Ministry showed center-south sugar production totaled 2.19 million metric during the second half of May, down -24.8% from the same period last year. Cane crush fell 12.9% to 41.23 million tons, while ethanol production rose 1.8% to 2.1 billion liters. Heavy rains were blamed for the lower crush. These numbers were worse than expected by the S&P Global Energy poll calling for sugar production to come in at 2.39 million tons and cane crush at 43.9 million. El Nino could also hurt production in Thailand and India.

COTTON

December Cotton was near unchanged early Thursday after reaching its highest level since June 4 on Wednesday, where it was stopped by the 100-day moving average. The market managed to gain 5.30 cents in five sessions (+7%) off optimism about demand, as well as ongoing concerns about the US crop with a noted lack of moisture in west Texas. Sharply lower crude oil prices provide a relief to the global economy, which should support cotton consumption (and US exports) even if lower crude prices reduce the cost of producing polyester. Some traders also suggest that the 13-cent selloff from the May highs sparked some bargain hunting

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