Developing Concern On Wet African Mid-Crop

COCOA

July Cocoa was near unchanged overnight following its breakout rally to the highest level since February 21 yesterday. A drop in Ivory Coast port arrivals this week and perhaps some developing concern over the state of the wet African mid-crop have reinforced ideas that this market will remain tight for some time. World Weather Service says rain will continue to be sporadic through the next week with some areas getting significant rain while others only getting light amounts. Ivory Coast port arrivals for the 2024/25 marketing year have reached 1.56 million metric tons, which is up from 1.379 million a year ago but the second lowest for this point in the season in at least five years and below the five-year average of 1.781 million. ICE certified stocks fell 77 bags yesterday to 2.119 million. This is the second time in four sessions they have declined.

COTTON

July Cotton saw no follow-through after its initial rally on Monday on the news of a 90-day pause in the retaliatory tariffs between US and China. The Brazilian President is in China this week, which is a reminder of the competition US exporters face from Brazil. The USDA Supply/Demand report on Monday put the US 2025/26 stocks/use ratio at 36.6%, which was slightly tighter than 37.5% for 2024/25 but well above the five-year average of 28.0%, indicating that supply will continue to be ample. Brazilian production was estimated at 18.25 million bales, up from 17.00 million in 2024/25. US plantings are running behind the average pace, particularly in the Delta, which has seen too much rain recently. World Weather Service says Texas will be dry for much of the next two weeks and that planting should advance as fields dry down after recent rain. On the other hand, they added that West Texas planting prospects improved from the recent rain but that more is needed, especially in the dryland areas of the southwest. Field conditions in the Delta are a little too wet, and drying will be interrupted periodically by more rain during the next ten days. Xinjiang, China would benefit from some rain to support the best possible planting and establishment environment. Early season planting of cotton in northern India and Pakistan is under way, and recent showers helped reduce temperatures and improve planting conditions.

COFFEE

July Coffee fell to its lowest level since April 22 yesterday but managed a significant bounce off its lows. Forecasts for Brazil’s 2025/26 coffee crop have been revised higher by various players over the past week or so, with Safras & Mercado raised its the all-coffee forecast to 65.51 million bags from 62.45 million in December and Conab raising its forecast to 55.7 million from 51.8 million in January. However, Cecafe reported that Brazil April green coffee exports totaled 2.78 million bags, down 29% from a year prior. World Weather Service says warm temperatures and limited rainfall have occurred across Brazil’s coffee production region in recent days and that the trend will prevail through much of next week. Totally dry weather is not likely, but the few showers that pop up from time to time will be too brief and light to counter evaporation for the most part.  Frequent rounds of showers and thunderstorms will continue through the next week in Colombia and western Venezuela, where enough rain will fall to keep conditions for coffee mostly favorable. Brazil’s arabica harvest begins in May/June. This is the off year in the biennial cycle, but prospects looks better than they did earlier this year. ICE certified stocks increased by 114 bags yesterday to 844,047. Stocks pending review increased by 3,055 bags to 145,452, the highest since March 18, 2024.

SUGAR

July Sugar is lower this morning after it rallied to its highest level since April 8 yesterday in the wake of the UNICA report that showed Brazilian center-south sugar production for the second half of April lagging behind last year’s pace. The lower production may have been due increased rainfall during the period, which likely slowed harvest and crushing activity. But with production -53% from the a year ago, it also called traders’ attention to the possibility that last year’s drought has significantly damaged this year’s crop prospects. The increased rainfall should eventually support stronger production. Earlier this week Louis Dreyfus said that it expects the global sugar market to switch from deficit of 5.2 million metric tons in 2024/25 to a surplus of 400,000 in 2025/26. They are concerned about Brazil’s crop but are optimistic about India. India’s weather office has stated that monsoon rains are expected to hit the southern coast on May 27, five days earlier than usual, which would be the earliest arrival in at least five years. A strong monsoon would be beneficial for the cane crop.

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