Cotton Declines, Traders Await Export Sales Data

COTTON

This week’s rally in December Cotton stopped yesterday when the market failed to push though the 100-day moving average. Yesterday’s FOMC rate-cut announcement (25 basis points as expected) supported the market for few minutes, but cotton quickly resumed its decline, and overnight it extended its losses. The bulls need to see this morning’s export sales come in strong. Last week’s report showed net sales of 129,598 bales for the week ending September 4, which was disappointing after sales of 244,971 the previous week. Cumulative sales for 2025/26 had reached 34% of the USDA forecast versus a five-year average of 50% for this point in the marketing year, and if this situation does not improve, USDA could be expected lower its forecast for 2025/26 exports, leaving an even looser supply setup. China and India have stepped in as buyers recently, being the second or third-largest buyers for the past two weeks, and this has added to optimism for US export prospects. However, like the US, China’s crop appears to be in good shape, which could limit their needs going forward. Global economic uncertainty, especially in the textile trade, is keep a lid on demand expectations.

COCOA

December Cocoa edged lower overnight, continuing the mild selloff this week after the market failed to push through the 50-day moving average. Rainfall has started to come to Ivory Coast after an extended dry period, and this has boosted expectations for the main crop, which officially begins next month, as well as the mid-crop, which will be harvested next spring. The overnight maps showed rains fell across most of Ivory Coast over the last 24 hours, with the heaviest amounts still in the north but increasing in the south as well. World Weather Inc. says frequent rains are likely to continue from Ivory Coast through Ghana and Benin to Nigeria and Cameroon during the next week.  Eventually, all production areas will be impacted multiple times and sufficient rain is likely to improve main season crop development conditions and to induce mid-crop flowering. There were reports this week of black pod disease in southwestern Cameroon after weeks of heavy rains there.  An industry executive speaking at the European Cocoa Association conference gave a dire warning for the future of cocoa production, saying the world could lose a third of its supply over the next 15 years if no action is taken to tackle climate change and disease. He said that west Africa could lose 500,000 metric tons to disease alone. A scientist who addressed the conference said as of 2023, as much as 11.7% of the cocoa growing area in top producer Ivory Coast was infected with swollen shoot disease.

SUGAR

March Sugar extended yesterday’s selloff overnight and is now approaching its contract low from earlier this month. Yesterday’s report from UNICA report came in a little bearish against expectations, with Center South Brazil sugar production for the second half of August at 3.872 million metric tons versus trade expectations of around 3.8 million, but the report also indicated that Brazilian production is running at a strong pace this year despite last year’s drought. Sugar production has steadily increased since June, as dry weather has been conducive to harvest after wet weather in June caused a delay. Brazilian production has a tendency to peak in late July, but the slow start may have allowed for the late-season surge. Cumulative sugar production for the 2025/26 marketing year is now running about 1.9% behind last year versus being -4.7% on August 16, -9.2% on July 16 and -14.7% on June 16. There were 77.35 kilograms of sugar produced per ton of cane during the second half of August versus 72.43 kilograms a year prior. Year-to-date yields is running about 3% above a year ago. Earlier this week, the co-head of sugar trading at Sucden raised the possibility that India could export as much as 4 million metric tons of sugar in 2025/26, which was higher than the 2 million that the Indian farmers’ union had requested earlier this week.

COFFEE

December Coffee was slightly higher overnight but confined to the lower end of yesterday’s range. The market saw a steep selloff yesterday after putting in a new contract high on Tuesday. The selloff may have been triggered by a sharp increase in margin requirements by the exchange, but there was also some technical disappointment when the nearby contract failed to take out the all-time high from February. Cooxupe, Brazil’s largest coffee co-operative, said on Wednesday that its farmers had harvested 98.9% of their 2025 crop as of September 12, up from 97% the previous week and above the 97.3% reported at the same time last year. The 50% tariffs imposed on Brazilian imports into the US has sparked a hunt to secure supplies in the US and a steep decline in ICE stocks. ICE certified stocks declined by 9,925 bags yesterday to 659,949, their lowest level since April 30, 2024. Brazilian farmers are reportedly reluctant to sell their supplies on the world market when there is a possibility that the US courts may deem the tariffs illegal. In the meantime, dry conditions in Brazil are starting to worry spark concerns about the next crop. World Weather Inc. commented that the light rains in Sul de Minas and several neighboring areas this week were probably not enough to induce flowering. Next week could provide another opportunity for rain to impact portions of the coffee regions.

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