Cotton Steadies Under USD, Harvest Pressure

COTTON

December Cotton is consolidating after falling to its lowest level since April last week. The Dollar index was sharply higher overnight, which puts some pressure on cotton on ideas that it makes US exports less competitive. Crude oil prices were a little higher overnight, offering some support to cotton. The government shutdown leaves the market without its usual data clues, including the weekly Export Sales report last Thursday and the weekly Crop Progress report this afternoon. Last week’s progress report showed 47% of the US crop was rated good/excellent as of September 28 versus 31% a year ago and a five-year average of 40%. Texas was 41% G/E versus 20% a year ago and a five-year average of 26%. The report also showed 67% of the US crop had bolls open versus a five-year average of 69%. The five year average for this week (October 5) is 79%. Likewise, 16% of the US crop had been harvested, which was right on the five-year average. The five-year average for this week is 21%, so harvest is likely moving along and offering some pressure on prices.

COCOA

December Cocoa extended last week’s selloff overnight and fell to its lowest level since last November. Based on the market action, traders believe harvest pressure has been boosted by the actions of the cocoa regulators in Ivory Coast and Ghana, which have aggressively raised their farmgate prices for producers. Late last week, Ghana raised its 2025/26 farmgate price another 12% to 58,000 Ghana cedis ($4,640) per metric ton, their second price increase this year. Earlier in the week, Ivory Coast raised its farmgate price to 2,800 CFA francs per kg ($5,050/ton), up 56% from last year. Both nations are raising farmgate prices to encourage farmers to sell their product and to discourage smuggling. The Ghana Cocoa Board (COCOBOD) estimates Ghana lost some 160,000 tons of cocoa to illegal cross-border trade in 2023/24. Drier weather occurred in portions of Ivory Coast and Ghana during the Friday through Sunday afternoon period. Sufficient rain is expected over the 7-10 days to maintain a favorable environment for crop development. The periods of dry weather make for good harvest conditions. Traders are wary of the upcoming third-quarter cocoa grind data for Europe, North America, and Asia due to be released on October 16 after the low numbers for the second quarter.

SUGAR

March Sugar is higher this morning on technical buying after the market pushed though the neckline of a head and shoulders bottom pattern overnight. This is often viewed as a major reversal pattern. The fact that the market rallied last week off a neutral to bearish UNICA report may be an indication that the strong production expected out of Asia and Brazil have been already priced in. The report showed sugar production for the first half of September totaled 3.622 million tons, which was right in line with expectations. Cumulative sugar production has reached 30.388 million tons, only slightly below 30.412 million from a year ago. The market has been banking on stronger output for Thailand and India following strong monsoons this year and is expecting India to allow exports of 2 million tons or more. Brazil’s outlook has improved this summer.

COFFEE

December Coffee was under pressure overnight but was back near Friday’s close later in the session. Brazil is still waiting for the arrival of seasonal rains. World Weather Inc expects an erratic shower pattern through next weekend in coffee production areas. The potential for more organized rainfall with greater amounts will rise from late in the weekend through the first half of next week. A general soaking is not very likely, but the frequency of rainfall should be on the rise which may improve pollination conditions in a few Zona da Mata and Sul de Minas locations. However, most of the coffee crop is still waiting for a general rain to induce broad-based flowering. The trade is still waiting for an indication of when the meeting between the Presidents of the US and Brazil will meet to discuss the 50% tariff on Brazilian imports. Now there is some speculation that the meeting could happen at the ASEAN summit in Malaysia on October 26-27 (to which President Trump has been invited). ICE certified stocks fell another 8,430 bags on Friday to 538,606, their lowest since March 19, 2024. Stocks declined 38,147 last week. Vietnamese government data showed the nation exported 1.23 million metric tons of coffee from January through September, up 10.9% from a year earlier. Exports in September totaled 81,000 tons, up 58.5% from the same period last year.

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