Coffee Supply Tightens

COFFEE

December Coffee was lower early Tuesday after first reaching its highest level since October 23 overnight. Near-term supplies remain tight, and producer sales from Brazil appear to be slow. The heavy rains Brazil experienced in June and July delayed the harvest and interrupted the drying process and likely caused problems with bean quality. This is expected to lead to a shortage of high-quality coffee and limit the amount of that will be submitted for grading at the exchange. ICE certified arabica stocks fell 1,750 bags on Monday to 226,242, their lowest since December 4, 2023. Traders are also aware that El Nino-induced dry conditions could cause problems with flowering and cherry setting for Brazil’s 2027 crop, later this year. Indonesia continues to see drier than normal conditions that could reduce their robusta crop. Vietnam also faces potential problems, but so far they have not seen a significant dry trend.

SUGAR

October Sugar could be headed for a consolidation period after appearing to reject last week’s move above 18-cents. Producer groups in France said the nation’s beet harvest is on course to be more than 20% below the five year average. The European Union’s crop monitoring service MARS is estimating the EU sugar beet yield at 72.2 metric tons per hectare, 5% below the five-year average and France’s yield at 76.5 tons per hectare, 7% below. India recently took steps to allow 1 million tons of duty free imports. Sugar grower groups have maintained that the current tight supply situation is due to hoarding and speculation and not the emphasis on ethanol production, but the data suggest those factors did play a role. India has achieved the 20% ethanol blending target in gasoline, five years ahead of the original 2030 deadline, having risen from 1.5% in 2014. Indian sugar production for 2025/26 (October-September) was approximately 27.9 million metric tons, and domestic consumption was estimated at 28-28.5 million tons. About 3 million tons were used for ethanol production and approximately 800,000 tons were was exported beyond the 2 million-ton limit. This puts beginning stocks for 2026/27 at roughly 3.5 million tons versus 5 million a year ago. Sources at the India Meteorological Department told Reuters that total rainfall this monsoon season is likely to be about 15% below the long-term average, which would be the lowest since 2009 and nearly double the 8% deficit projected in the department’s initial forecast. The IMD is expected to issue its official forecast for September at the end of August. The monsoon could begin withdrawing from northwestern parts of the country a few days earlier than usual next month. The monsoon typically begins in June and starts to retreat by September 17 from northwestern parts of the country, ending across the country by mid-October. El Nino is strengthening and is likely to intensify further in September, suppressing rainfall.

COCOA

December Cocoa was near unchanged early Tuesday, as it continued its consolidation pattern of the past two months. The market is supported by concerns that El Nino will disrupt production for the 2026/27 main crop, but in the meantime, the weekly arrival at Ivory Coast ports a pointing to a strong end to the 2025/26 crop. Ivory Coast port arrivals were estimated at 3,000 metric tons for the week ending August 23, down from 4,000 the previous week and 10,000 for the same week a year ago. However, cumulative arrivals for the 2025/26 cocoa marketing year (October-September) have reached 1.999 million tons, up from 1.663 million at a year ago and above the five-year average at 1.974 million. It is the highest for this point in the season since 2022/23. Ivory Coast farmers interviewed by Reuters said more rains mixed with sunny spells are be needed to strengthen the upcoming main crop. Farmers warned that if rainfall remained modest, crop harvesting could start to sharply decline by late December. Rains have retreated northward over the past month, which is typical for this time of year, and the trade is waiting for them to return. El Nino could slow that return. World Weather Inc. said on Monday that scattered showers and thunderstorms were expected to persist in west-central Africa through the next week.  Some periodic light to moderate rain is expected to support some of the region’s crop, but a more generalized rain will still be needed, especially in southern production areas.

COTTON

December Cotton was lower early Tuesday despite Monday’s afternoon’s Crop Progress showing further deterioration in the US crop, perhaps because of increased chances of rain for Texas and parts of the Delta. World Weather Inc. said late yesterday that there should also be some rainfall in the Delta and southeastern states and that rain in Texas and Oklahoma later this week will result as the high-pressure system aloft temporarily breaks down. They look for drier and warmer weather to quickly resume in the southern Plains for over the weekend and next week. The Crop Progress report showed 37% of the US cotton crop was rated good/excellent as of August 23, down from 38% the previous week, 54% a year ago, and below the five-year average for this date of 46%. Texas was 19% G/E, down from 21% last week, 46% a year ago, and the five-year average of 33%. Mississippi went from 45% G/E last week to 53% this week and is almost approaching the five-year average of 56%. The report also showed 20% of the US crop had bolls open, up from 14% the previous week, 19% a year ago and in line with the five-year average for this date at 20%. India is on course for its weakest monsoon since 2009, which could reduce their cotton output.

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