Dryland Crop Needs Moisture

COTTON

Last week’s USDA supply/demand report took the forecast for US 2025/26 stocks/use below the five year average for the first time this season, which puts the market in a less defensive posture. The next thing the bulls need is some sort of improvement in the US export outlook. US export sales for 2025/26 are starting out with their slowest past in more than a decade, but they did improve during the first week of August, with net sales of 242,000 bales. Last week’s US Drought Monitor showed 5% of the crop was in an area experiencing drought. This was up from 3% the previous week but still historically low. The Delta is “abnormally dry,” and areas in Texas along the border with Mexico are experiencing moderate to severe drought, but most of West Texas dryland areas appear normal. However, World Weather Service says West Texas rainfall is expected to be limited over the next 10-14 days, which will lead to net drying. Temperatures should be seasonable. The dryland crop needs moisture, especially in the southwest. Timely rain will become increasingly important over the next two weeks.

COFFEE

December Coffee found support last week off the consistent decline in exchange stocks and reports that a frost may have damaged come coffee plants. ICE certified stocks did manage to increase 5,078 bags on Friday to 731,739, but this was their first daily increase since July 24 and only their second since July 15. They fell to their lowest level since May 2024 on Thursday. Despite press reports of possible frost damage to crops, World Weather Service says any damaged was minimal, and they maintain that coffee areas will not be vulnerable to any crop threatening cold weather in the next two weeks. Very warm temperatures and minimal rainfall are expected this week, which could lead to concern about tree stress. This type of weather is not unusual for late mid to late-August.

SUGAR

October Sugar extended last week’s selloff overnight to trade to its lowest level since August 7. Concerns about Brazilian production have been eased by a recovery in output during July, and concerns about crops in India and Thailand have been alleviated by rainfall reaching area that had been deprived. The UNICA report on Friday showed that cumulative Brazilian Center South sugar production for the marketing year that began in April was 7.8% below a year ago, which was an improvement over being 9.2% behind as of July 16 and 14% behind at the end of June. But while production in the first half of the month was 15% above last year, production during the second half of the month was 0.8% behind. Sugar’s share of the cane crush continues to grow, coming in at 54.1% in the second half of July versus 53.7% in the first half and 50.3% a year ago. Brazilian production tends to peak for the year in the second half of July. World Weather Service says flooding rain occurred along India’s central west-coast during the weekend, but other areas in India are expecting timely rain later this week through next week, which should be favorable for summer crop development. Western Thailand has been receiving greater rainfall recently easing long term dryness and improving summer crop conditions. Reuters reported that Brazilian state-run oil company Petrobras considering an investment in sugar and ethanol producer Raizen as a way to re-enter the ethanol market. Raizen has been facing operational challenges and high debt

COCOA

December Cocoa extended Friday’s recovery overnight but backed off from the overnight highs. Ivory Coast port arrivals totaled 10,000 metric tons for the week ending August 17, down from 11,000 the previous week but up from 9,000 a year ago. Cumulative arrivals have reached 1.653 million tons, down 2.1% from this time last year. The market awaits the main crop, which officially begins on October 1. World Weather Service reported rains continued to stay north of the key growing areas in Ivory Coast and Ghana over the weekend. It was not completely dry, but conditions remained light. The rainfall pattern is expected to shift southward late this month and in early September. The greatest rain may be a little slow in returning this year and that may raise a little concern among growers, but it should arrive eventually. In the meantime, there is likely to be a drying trend. Ivory Coast’s cocoa grind rose 2.2% year-on-year in June to 46,180 metric tons, according to data from exporters’ association GEPEX that was released late last week. Cumulative grind since the start of the 2024/25 season stood at 475,764 tons of beans, down 0.8% from the same period last season.

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