May Cotton Back Above 66¢

COTTON

May Cotton was higher early Friday and was back above 66 cents for the first time since late February. Rising crude prices increase the cost of polyester, making cotton relatively more attractive to buyers. But on the other hand, a shaky global economy driven by higher energy prices could undermine cotton demand. Fertilizer shipments out of the Persian Gulf have stopped, and this is putting upward pressure on prices in the US just ahead of planting. The US announced overnight that it was issuing a 30-day waiver from sanctions on purchases of “floating” Russian oil, which pressured crude oil a bit and lent support to equities.

COFFEE

May Coffee was lower early Friday and back in the vicinity of Wednesday’s one-week low. Forecasters and analysts have started to raise their forecasts for Brazilian 2026/27 production as the growing season has advanced without a substantial threat to the crop. Some have suggested that the harvest will start earlier than normal this year. There were also reports that sellers in Brazil and Colombia are reluctant to sell at current prices. World Weather Inc. said most of Brazil’s coffee production region saw rain this week. More is expected over the next week to 10 days, primarily in northeastern Sao Paulo and most of the Minas Gerais’ production areas.

COCOA

May Cocoa was near unchanged early Friday following a selloff on Thursday. Some of the relief that the reductions in official farmgate prices in Ivory Coast and Ghana would finally lower burdensome supply has passed. On Wednesday the Ivorian regulator, the CCC, said about 400,000 metric tons of the mid-crop had already been contracted, which is about the size of a normal crop. However this year’s crop looks like it is well positioned to be larger than normal because of good growing conditions and because the official start up date was moved to March 1 from April 1. The Iran war may also be making buyers hesitant.

SUGAR

May Sugar was holding this week’s gains early Friday but had yet to take out Monday’s two-month high. Higher energy prices have sparked speculation that Brazil would focus more of its cane crushing on ethanol production rather than sugar, but so far, Brazil’s state-controlled oil company, Petrobras has yet to increase local prices. Brazil was already expected focus more on ethanol this year, but that was based on low sugar prices. If high prices for crude oil are sustained, we could see more pressure on Brazil to boost their ethanol mix. Several analysts have already tightened their expectations for global sugar balance due to reductions in India’s expected output.

Interested in more futures markets?  Explore our Market Dashboards here.