COTTON
March Cotton fell to new contract lows yesterday, led by a strong dollar and weakness in equity markets. The dollar eased a bit overnight, which likely helped cotton avoid a move to a new low. The cotton market found support yesterday from the export sales report, which showed an improvement over the previous week, but selling reemerged as the session progressed. The export sales report showed US cotton sales for the week ending December 12 at 194,895 bales for the 2024/25 (current) marketing year and 6,864 for 2025/26 for a total of 201,759. This was up from 156,333 the previous week and 170,663 the week before that, but it was still short of the 300,000+ that were seen for two straight weeks in November. Cumulative sales for 2024/25 have reached 7.207 million bales, down from 8.123 million at this time last year and still the lowest for this point in the season since 2015. Sales have reached 68% of the USDA forecast versus a five-year average of 76% for this point in the marketing year, which suggests the USDA may eventually lower its forecast for the marketing year. The largest buyer this week was Vietnam at 42,396 bales, followed by Pakistan at 37,028 and Turkey at 32,110. The looming US government shutdown may add to concerns about US export prospects. If the outside reversal higher in the Brazilian real from yesterday sparks a recovery, it may ease pressure on Brazilian growers to sell.
COCOA
The cocoa market was lower overnight, extending its selloff from Wednesday’s record highs, but the market did find support at the 9-day moving average and claw back some of its losses. The southeast corner of Ghana received 5-10 mm of rain over the past 24 hours (along the coast), but most of west Africa remained dry. World Weather Service expects little change through the next week. Showers will pop up occasionally in coastal areas, but most interior crop areas are to remain dry and warm. The current dry conditions are expected to lower output in February and March, which raises concern about overall supply following three years of global production deficits. Prices have increased 38% since the end of November, which suggests that much of this concern has already been assimilated. There may also be an impulse to take profits ahead of the holiday. ICE exchange stocks fell 13,979 bags yesterday to 1.387 million, their lowest since December 2003.
SUGAR
March Sugar traded inside yesterday’s range overnight after falling to its lowest level since September 13 yesterday. Priced have declined 12% in 10 sessions, and traders may start to wonder if they have fallen too far, too fast. Brazilian production increased during the second half of November, but this came after a steep decline in the first half of the month. The overall production trend is lower than last year. A report from Czarnikow yesterday said that Mexican sugar exports to the US could cease if the Trump administration goes ahead with its plan to apply a 25% tariff on Mexican sugar. Mexico currently has a duty free quota as part of the US-Mexico-Canada agreement. A tariff could result in an annual US shortfall of 500,000-1 million metric tons. US domestic prices would rise to a level where duty-paid imports would become viable. India’s food secretary said this week that the government may allow some sugar exports, provided there is any surplus left after ethanol blending. The Brazilian real may have stabilized in the wake of a reversal higher from all time lows yesterday. This could east pressure on Brazilian mills to sell.
COFFEE
March Coffee is higher this morning following a reversal lower yesterday. Safras & Mercado said today that they expect Brazil’s coffee productions to reach 62.45 million bags in 2025/26, which would represent a 5% decline from 2024/25. Arabica production was estimated at 38.35 million bags. This is not as ominous as the forecast from Volcafe a week ago Monday that put 2025/26 arabica production at 34.4 million bags. Brazil’s key arabica producing state of Minas Gerais was mostly dry over the past 24 hours, with only the western edge of the state receiving any at all, and that was only 1-5 mm. World Weather Service does see rain activity increasing from south to north today through early next week, which they say should be sufficient to support coffee development throughout the production region. The question remains whether this rainfall is coming to late. World Weather Service says sections of Vietnam received moderate rainfall over the past 24 hours, but the heavy amounts seemed to be north of the Central Highlands, the key growing region. Rains are not welcome there at this time, as they tend to slow harvest and raise concerns about premature flowering. WWS says a tropical disturbance will likely bring moderate to locally heavy rain to the region early next week with additional showers later in the week. Vietnamese farmer reports show harvests are 30%-60% complete. In their bi-annual global coffee outlook this week, the USDA put 2024/25 global coffee ending stocks at 20.9 million bags, the lowest in seven years. The Brazilian real had an outside day higher yesterday after falling to a record low against the dollar. The weak currency would normally encourage producers to sell, but growers have already sold a good portion of the 2024/25 crop, and uncertainty over the upcoming crop may limit selling on their part.
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