Lower Dollar Improves Export Outlook

COTTON

May Cotton sold off yesterday despite a positive export sales report, but it is higher this morning. The bulls were disappointed that market failed to take out the January high this week and were anxious to take profits after a three-day rally. The dollar has fallen to its lowest level since mid-December today, which improves the export outlook. Yesterday, Conab put Brazil’s 2024/25 production at 3.76 million metric tons (17.23 million bales) versus 3.69 million (16.95 million bales) in their previous forecast. USDA this week left Brazil’s production unchanged at 16.9 million bales. USDA cotton export sales for the week ending February 6 came in at 244,673 bales for the 2024/25 (current) marketing year and 19,102 for 2025/26 for a total of 263,775. This was up from 203,782 the previous week. Cumulative sales for 2024/25 have reached 9.131 million bales, down from 10.307 million at this time last year and the lowest since 2015/16. Sales have reached 89% of the USDA forecast versus a five-year average of 91% for this point in the marketing year. Shipments totaled 260,905 bales, which was the highest since August. The postponement of “reciprocal tariffs” may give exporters a bit of relief.

SUGAR

May Sugar is higher this morning following a breakout rally yesterday. Recent reports that India exports may not reach the 1 million-ton quota announced in January suggests and news this week that Indonesia plans to import around 200,000 metric tons of raw sugar to top up its food reserves suggest that supply is not as ample as thought. However, an analyst for a Thai sugar producer said this week that his nation’s 2025/26 sugar production could reach 11.5 million tons, up from 10.3-10.4 million in 2024/25. Recent dry conditions in Brazil have raised concerns about their upcoming crop.

COCOA

May Cocoa was higher overnight and traded back above the 50-day moving average for the first time since February 5. The market is finding support this week from a slowdown in rain events that had been viewed as a  harbinger of the rainy season. World Weather Service says west-central Africa areas still need rain after being persistently warm dry in recent weeks. They mentioned that greater rain is possible next week, with Ivory Coast and southwestern Ghana seeing the biggest impacted initially, but they added that some of the rain has been reduced and delayed. However, much of Ivory Coast did received moderate amounts of rain over the past 24 hours, and this seems to be an improvement. ICE warehouse stocks decreased by 5,515 bags yesterday to 1.383 million, the lowest since January 31. Stocks are down 14,933 bags over the past five days.

COFFEE

May Coffee was lower overnight but it was still consolidating inside Monday’s wide range. Expectations for Brazilian 2025/26 arabica production have taken a hit this week with a drier turn in the weather, but they were already reduced by last year’s record drought and the fact that this is an “off year” for the crop. Active rains in late 2024 and early 2025 have boosted soil moisture and should offer some protection against the dry conditions, as long as wet weather returns. World Weather Service said yesterday that net drying is expected to continue for the next week to 10 days. However, the eastern half of the key growing region of Minas Gerais did see some moderate rain over the last 18 hours, which may bring some relief. A Reuters poll of analysts called for a substantial increase in Brazilian production in 2026/27, provided the weather cooperates. ICE certified arabica stocks decreased by 8,140 bags yesterday to 849,935. Stocks are down 4,618 in the last five days

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