Coffee Market In Consolidation Mode?

COFFEE

December Coffee had an outside day lower yesterday after reaching a 50% retracement of the selloff from the September high to last week’s low. The market could be in a consolidation mode until there is some update on a planned meeting between President Trump and Brazilian President Luiz Inacio Lula da Silva. They are expected to meet this week via phone or videoconference, and there are some hopes that they may reach some sort of agreement to end the 50% US tariff on Brazilian coffee. Brazilian coffee consumption is dropping in the face of higher prices. Brazil is the second largest coffee consumer after the US, and some 24% of respondents to a study said they have reduced their consumption. ICE certified stocks fell another 4,999 bags yesterday to 571,754, their lowest since March 22, 2024. Stocks have declined for 15 straight sessions.

COCOA

December Cocoa extended its selloff overnight and was approaching its July low. Ivory Coast farmers are turning more optimistic about the upcoming main crop now that rains have returned. Farmers interviews by Reuters said that above average rainfall last week is expected to support a longer and larger main crop. They also said that similar weather in October could support an abundant and high-quality main crop in January and February. The Ivory Coast cocoa regulator, CCC, said it plans to increase its farmgate cocoa price for farmers by 39% to a record 2,500 CFA francs ($4.50) per kg for the main 2025/26 crop harvest. In August, Ghana increased its farmgate cocoa price by 4% to an equivalent of about $5 per kg. Exporters say the CCC has already sold more than 1.15 million tons of cocoa bean export contracts, based on a forecast of 1.2 million tons, which is down 11.5% from last year. Ivory Coast port arrivals totaled 600 metric tons for the week ending September 28, down from 5,000 the previous week and 17,000 for the same week last year. Cumulative arrivals for 2024/25 reached 1.691 million tons, down from 1.754 million last year and a five-year average of 2.089 million. Harvest for the new crop has begun to pick up pace and is expected to increase gradually from October through December.

COTTON

December Cotton extended yesterday’s selloff overnight and fell to its lowest level since April 4, the day after the market put in its post “liberation-day” tariff lows. The slow pace of export sales is hard to ignore, and the US crop conditions remain on the whole strong. Texas is doing very well but that is somewhat offset by lower ratings in the Delta and Georgia. The weekly Crop Progress report showed 47% of the US cotton crop was rated good/excellent as of September 28, unchanged from the previous week but up from 31% a year ago and above the five-year average for this date at 40%. Texas was 41% G/E, unchanged from last week but up from 20% a year ago and above the five-year average at 26%. Georgia was 43% G/E, down from 46% last week and 66% back in early August. They are below the five-year average at 55%. Mississippi was 32% G/E, down from 39% last week, and below the five-year average at 59%.

SUGAR

March Sugar continued its recovery from contract lows yesterday and held those gains for the most part overnight. The trade is awaiting the UNICA update on the Brazilian Center-South sugar crop for the first half of September, which is expected to be released this week. A survey of analysts by S&P Global expects sugar production for the period to be around 3.6 million metric tons, up 15% from the same period a year ago. This would put cumulative production for the 2025/26 marketing year (which began April 1) down just 0.2% from a year ago after being down 14.7% in mid-June. A senior official at the State Meteorological Department official in India told Reuters today that the nation recorded above-average rainfall during the June to September monsoon season for a second consecutive year.

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