ICE Stocks Resume Decline

COFFEE

December Coffee extended its rally overnight and reached its highest level since May 20. The market has been supported by a drop in certified exchange stocks and reports of frost damage in Brazil from an event a couple of weeks ago. ICE certified stocks fell 6,270 bags yesterday to 729,829, marking the second day of declines following three days of increases. This is their lowest since they fell to a 15-month low last Thursday. Stocks have fallen roughly 112,000 bags since July 1, and of that, 96,000 were Brazil-origin. Brazilian stocks are currently around 132,000 bags versus 414,000 at this time a year ago. A Brazilian cooperative this week said initial estimates from the cold snap had a loss of around 412,000 bags for the upcoming crop. This is roughly 1% of the nation’s arabica production. The group expects to get a firmer idea of the damage as the crop moves forward. Robusta prices in Vietnam were higher this week as well. World Weather Service says a tropical cyclone is likely to form just west of the Philippines during the next few days and it should bring moderate to heavy rain to portions of northern Vietnam. They do not expect winds to be strong enough to seriously threaten most coffee, but there is still time for the forecast to change.

COCOA

The cocoa market is awaiting the arrival of the West African main crop, which officially begins October 1. There has been some concern expressed by Ivory Coast growers about dry and cool conditions in recent weeks, but there have also been reports of good pod development. No consistent problems with the upcoming crop have been noted. World Weather Service expects conditions to remain on the dry side in West Africa during the next week, with mostly isolated rans. Many areas will receive at least some rain, but greater amounts would likely be beneficial. It is not unusual for the rainy season to “take a pause” in late July and early August. WWS looks for the rains to return in the last days of this month or in early September. If that does not happen, we may hear more concern from growers. There was some talk yesterday that Ecuador could be exempted from the 15% tariff rate. Ecuador is expected to be the third  largest producer of cocoa for 2024/25 at 480,000 metric tons versus 1.850 million for Ivory Coast and 600,000 for Ghana. ICE exchange stocks fell 14,843 bags yesterday to 2.192 million, the lowest since May 28. Stocks have declined in for the past 14 sessions.

SUGAR

October Sugar bounced overnight following a selloff yesterday, as the market remains inside a range bound by 16 and 17 cents. At the July 3 low, the market had fallen 29% from its 2024 peak off expectations for a sharp recovery in global supply this year, as growing conditions had improved for India, Thailand, and Brazil. The optimism was shaken when the 2025/26 Brazilian numbers, as reported in the bi-weekly UNICA reports, showed a severe drop from year ago levels as of June 30. The numbers improved dramatically in the first half of July, but not so much for the second half. Thailand saw some dry conditions emerge this summer, but rains appear to have returned. Refining margins have improved and China reported strong imports of refined sugar in July. World Weather says Brazilian sugarcane areas will NOT be vulnerable to any crop threatening cold weather in the next two weeks, but rainfall will be minimal.

COTTON

December Cotton has chopped around in a sideways pattern all week. The market got a bullish surprise from the USDA report last week, but it has been held back by low expectations for US exports. The weekly export sales report yesterday was disappointing, coming in at 105,375 bales for the week ending August 14 versus 243,038 the previous week and below the four week average of 137,800. Cumulative sales for 2025/26 have reached 3.233 million bales, down from 4.213 million at this time last year and the lowest since 2015/16. Sales have reached 29% of the USDA forecast versus a five-year average of 46% for this point in the marketing year. News this week that India was suspending an 11% import duty on cotton provides some hope that US exports could improve. The government is trying to support the garment industry, which is facing tariffs of up to 50% from the US due to its purchases of Russian oil. India has not been a major buyer of US cotton this year. They are the 13^th largest buyer so far with commitments of 53,000 bales out of a total of 3.234 million. A USDA update for Pakistan lowered the 2025/26 cotton area to 1.85 million hectares and production forecast is lowered to 4.8 million. With domestic cotton use expected to decrease slightly, the import forecast for 2025/26 has been lowered to 5.6 million bales. World Weather Service says West Texas cotton areas may get rain in the last days of August and early September. The moisture will be good for late season cotton boll setting if frost and freezes come later than usual, as this year’s cotton will be late maturing and harvested because of late planting, and the crop will be more vulnerable to frost/freezes. Crop ratings well above average. The crop progress report earlier this week showed 64% of the Texas crop was setting bolls, steady with a year ago but down from a five-year average of 78%, which is about a week behind. The dollar has been moving higher over the past week off diminished expectations for a Fed rate cut, and this makes US cotton less competitive on the global market.

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