December Cotton Firms on Market Optimism

COTTON

December Cotton has is higher this morning on optimism on reports that the US government shutdown may be nearing an end. Equity markets are higher and the dollar is lower, and both moves are supportive to cotton. Soybeans are higher as well, which lends support to cotton. Any optimism about China buying US soybeans seems to lends some hope that they will buy US cotton as well. World Weather Inc. says US harvest conditions have been mostly good recently. Cold temperatures in the southern Plains, Delta and southeastern states will end the growing season for many areas. Precipitation will remain limited this week favoring more fieldwork. We haven’t had a Crop Progress report in more than a month. The five year average has the crop 65% harvested by now. USDA Crop Production and supply/demand reports will be released on Thursday. This will be the first update on the crop since the shutdown. As of September 28, 47% of the US crop was rated good/excellent versus 32% a year prior and a five year average of 40%, and Texas was 41% G/E versus 26% on average. The dry conditions in late summer in the Delta and Southeast may pull the total US production numbers down a bit. Also prior to the shutdown, weekly US export sales had reached 36% of the USDA forecast for the 2025/26 marketing year versus a five-year average of 53% for that point in the season. This discrepancy could encourage the USDA to lower its export forecast for 2025/26, but they may also choose to wait until the export sales data is updated.

SUGAR

March Sugar is higher this morning after finding support above the 14-cent level last week. Indian Government and trade sources told Reuters that the government plans to allow 1.5 million metric tons of sugar exports in the 2025/26 season, up from 1.0 million allowed in 2024/25. Sugar producers had been asking for 2.0 million, so the 1.5 million may be construed as bullish against expectations. India was the world’s second-largest sugar exporter in the five years leading up to 2022/23, with shipments averaging 6.8 million tons annually. A poor monsoon and small crop in 2023/24 led to a cancellation of exports that year. The strong monsoon this year has boosted the nation’s prospects. A Mumbai-based dealer with a global trade house told Reuters that exporting 1.5 million tons could prove difficult, given that local prices are trading at a premium to global levels. However, others have said they expected to premium to disappear by December.

COFFEE

March Coffee is higher this morning, inside a triangle bound by the October 22 contract high at 414.80 and a low from three sessions later at 359.20. There has been no reported progress on talks between US and Brazilian trade representatives over the 50% tariff on Brazilian imports into the US. The US Supreme Court heard arguments on the legality of the tariffs last week, and the trade is awaiting a decision. If the court decides the tariffs are illegal, the market could be in for a steep selloff. There have been reports of Brazilian arabica coffee being shipped to warehouses in Europe that could help replenish ICE stocks. Last week there were reports that traders were shipping about 150,000 bags, with some estimates that 60,000 bags could arrive in time to be submitted for delivery on the December NY contract (first notice day November 19, last trading day December 19). ICE certified stocks fell 725 bags on Friday to 417,478, their lowest since March 7, 2024. Stocks fell 14,250 last week. The amount pending review has started to climb after falling to zero on October 27. There were 17,184 pending review on Friday, all in Antwerp. Of those, 11,934 were from Brazil. Growing conditions have improved for 2026/27 Brazilian crop. World Weather Inc. reports that rain fell in many coffee areas of Brazil at one time or another during the weekend. The greatest amounts occurred in Sul de Minas and northeastern Sao Paulo. Additional showers and thunderstorms are expected periodically to maintain a favorable crop outlook, although some of the moisture totals may be light for a while. Vietnam’s Central Highlands dried down over the weekend after Typhoon Kalmaegi impacted parts of the production region late last week. Vietnam coffee could see some logistical disruption, but crop damage is believed to  be minimal.

COCOA

March Cocoa edged lower overnight, following-through on a selloff from last week that began when the market traded up to the 50-day moving average and failed to move above that line. Some of the selling last week came from demand pessimism after Barry Callebaut said it expected sales of cocoa products to decline by a mid-single-digit percentage in its coming financial year due to high prices. Traders will be watching the Ivory Coast arrivals estimates for the week ending November 9, which will likely  be reported today. Last week they were estimated at 90,000 metric tons, which was the first time they were above year-ago levels all season. Another strong number could enforce bearish crop expectations. World Weather Inc. says West African seasonal rains are slowly winding down from north to south but that precipitation will occur periodically during much of the coming week to ten days. The longer the rains last, the better for late season production. ICE stocks increased 7,048 bags on Friday to 1.801 million after falling to their the lowest since March 26 on Thursday. Stocks fell 14,822 bags last week.

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