Coffee Market Awaits Tariff Decision

COFFEE

President Trump mentioned in an interview yesterday on Fox News that the US is going to lower some tariffs on coffee imports, but he did not mention Brazil specifically, and prior to this statement he had mentioned exempting coffee from tariffs on Vietnam. Vietnam produces mostly robusta beans, which in the US are used primarily for instant coffee. Up until the US put a 50% tariff on Brazilian imports, it had imported roughly 30% of its arabica beans from that country. The trade is awaiting a decision from the US Supreme Court on the legality of the tariffs. World Weather Inc. says net drying has returned to coffee production areas in Brazil after some beneficial weekend rain. Showers and thunderstorms should be better distributed throughout coffee areas next week. Prospects for the 2026/27 Brazil crop are looking much better than they were a couple of weeks ago. The Central Highlands of Vietnam will benefit from a drier weather pattern into Saturday before another round of frequent and significant rain affects the region next week. ICE certified stocks fell a 10,574 bags yesterday to 406,129, the lowest since March 6, 2024. The amount pending review has reached 27,886, the highest since September 8. Of those, 23,864 were from Brazil. All are located in Antwerp. There are currently 10,483 bags of Brazilian certified stocks in ICE warehouses versus some 435,000 a year ago.

SUGAR

The sugar market may be mulling over the possibility of a near term-bottom. There have been revisions lower in the anticipated global surplus for 2025/26, and some buyers have emerged at lower prices. This week, Datagro lowered its forecast the 2025/26 global surplus to 1 million metric tons from a previous forecast of 2.8 million. They expect Brazil’s center-south production to fall as we move towards the end of the year, due to mills ending operations early and changes in strategy to use less cane to make sugar and more to produce ethanol. They revised their Brazil 2025/26 center-south sugar production forecast to 40.8 million tons from 41.1 million tons previously, and they expect mills to start next year’s crop with a heavier ethanol focus. Datagro did cut its projection for India’s sugar crop by 700,000 tons to 32.1 million, saying excessive rains have reduced sugar content in the cane. France’s farm ministry lowered its forecast for sugar beet production 33.7 million tons from a previous estimate of 34.2 million. This would still be 3.5% above the 2024 harvest and 8.7% above the five-year average despite a smaller planted area. There were reports that China and Indonesia have increased buying to take advantage of lower prices, and the Egyptian Sugar and Integrated Industries Company (ESIIC) has set a tender to buy 50,000 metric tons of raw sugar cane with the offer deadline set for Saturday.

COTTON

March Cotton sold off sharply overnight and fell to its lowest level since putting in a contract low on October 14, as traders seem to be giving up on the idea that China will be a big buyer of US cotton or that low prices will bring in cash buyers. India’s cotton imports are forecast to climb 9.8% in the new season to a record high, but whether the US benefits from these purchases in a matter of debate. The last export sales report prior to the US government shutdown showed that as of September 18, India was the seventh-largest buyer of US cotton for the 2025/26 marketing year so far at 194,145 bales out of a total of 4.059 million total sold to the world. Vietnam was the largest buyer at 975,125 bales. India’s imports reached a record 4.1 million bales last year from the US, Brazil, Australia and Africa, but they only imported 453,000 from the US, according to weekly export sales data. A new round of trade negotiations with Vietnam have begun in Washington. In October, the US and Vietnam agreed to finalize a deal that would maintain US tariffs of 20% on imports of Vietnamese goods, but this would include some exemptions on some unspecified products. Coffee was mentioned, but not textiles. Maintaining a high tariffs on textiles could affect Vietnam’s demand for US cotton. Vietnam would like to wait until after the US Supreme Court decides on the legality of the tariffs.

COCOA

March Cocoa’s selloff yesterday puts it within striking distance of the October 13 low. The market has turned negative on prices in the wake of an improvement in Ivory Coast port arrivals and generally benign weather. Drier conditions aid in the harvest, drying, and transport of beans. Occasional rainfall can extend the growing season.  World Weather Inc says does not expect much change in weather for West Africa during the next week. Showers will occur regularly from Ivory Coast through central and southern parts of Ghana, southern Benin and southern Nigeria to parts of Cameroon.  Daily rainfall will be light. European Union member states are seeking to postpone the implementation of the bloc’s anti-deforestation law by another year, deferring the law’s application to December 30, 2026 for larger firms and June 30, 2027 for smaller ones. This could ease the threat of interrupted deliveries to Europe in 2026. ICE stocks fell 10,362 bags yesterday to 1.777 million, their second-lowest since March 24.

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