Arabica Production Forecast Surges

COFFEE

July Coffee extended its selloff early Thursday, falling to its lowest level since December 3, 2024. The nearby contract fell to its lowest level since November 2024. In their annual update on Brazilian coffee, the USDA put that nation’s 2026/27 coffee production at 71.9 million bags, up 14% from 63.0 million in 2025/26 and a new record. Arabica production was estimated at 47.5 million bags, up 25% from 38.0 million in 2025/26 and the highest since 2020/21. Robusta production was forecast at 24.4 million bags, down 2% from 25.0 million in 2025/26 but still the second highest on record. In May, CONAB put Brazil’s arabica production at 45.8 million bags, +28% from the previous year and total production at 66.7 million, +18%. The Brazilian Institute of Geography and Statistics (IBGE) put arabica production at 44 million bags (+20%) and total production at 65.1 million (+15%). USDA points out that these agencies use different methodologies and that their estimates have been consistently below USDA’s, but they all gained 20%-28% in arabica output from 2025/26. Brazilian exports are forecast at a record 49.07 million bags in 2026/27, and ending stocks are forecast 4.425 million, which would be the highest since 2022/23.

COCOA

July Cocoa was lower early Thursday but inside the range of the past week. The market has been in a sideways pattern since  putting in a four-month high in May. A report this week s that Ivory Coast had sold about 1 million metric tons of cocoa in export contracts for the 2026/27 main crop and that it has started to slow its sales due to concerns about the potential impact that El Nino lent some support, but conditions in West Africa remain favorable for production, with World Weather Inc expecting regular rounds of showers and thunderstorms across the region and all areas seeing multiple rounds of mostly light to moderate rain.  El Nino is on traders’ minds, and the chief of Barry Callebaut said it could eventually drive up cocoa bean prices by a few thousand pounds per metric ton. World Weather Inc. does not expect the effects to be felt until late in the third quarter or in the fourth quarter. Moisture levels in west Africa need to be closely watched

COTTON

December Cotton was lower early Thursday but inside this week’s range. The market has not been able to take out the high it made early Monday off the report that India was suspending its import duties on cotton. The weak rupee relative to the dollar has traders questioning the appeal of US cotton. If India shows up as a strong buyer in today’s export sales report, traders may take notice. Last week’s report showed total US cotton sales for the week ending May 21 at 153,622 bales for the 2025/26 (current) marketing year and of 112,041 for 2026/27 for a combined total of 265,663. Cumulative sales reached 99% of the USDA forecast versus a five-year average of 107% for this point in the marketing year. India has been the fifth-largest buyer of US cotton for the 2025/26 marketing year so far, having purchased a total of 626,500 bales as of May 21, their strongest pace since 2018/19.

SUGAR

July Sugar was higher early Thursday but inside Wednesday’s range. The market sold off on Wednesday after reaching its highest level since May 22 and then failing to close a gap from that day. Analysts are lowering their expectations for Brazil’s sugar production because of a greater focus on ethanol production. Wednesday’s higher action in crude may have provided early support to sugar. A survey conducted by S&P Global Energy has an average expectation for Brazil center-south sugar production for the first half of May at 2.08 million metric tons, which would be down 14% from the same period last year. This would be in sharp contrast to last week’s UNICA update for the second half of April, when production was more than double last year. First-half May cane crush is expected to be around 42.45 million tons, down 0.2% from last year, with total ethanol output (cane and corn-based) projected at 2.13 billion liters, up 19.7%. World Weather Inc. said rainfall may increase in center west, center south and far southern parts of Brazil during the June 11-16 period as cooler air pushes into the nation from Argentina. This could slow the cane harvest. Brazilian sugar exports totaled 1.97 million metric tons in May, down from 2.23 million a year prior. El Nino will have the greatest influence on tropical areas of the world late in the third and fourth quarters of this year, with some drying tendency in Southeast Asia possible in the next couple of months. They expect India’s monsoon to continue to underperform over the next ten days leaving interior parts of the south drier than usual. However, India’s sugarcane areas may not experience as much yield loss as crops in the central part of the nation. Monsoon rains hit the coast of India’s southernmost state of Kerala on Thursday, three days later than normal.

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