Texas Dry Spell Supports Cotton

COTTON

December Cotton was higher overnight after bouncing off a two-week low on Friday. The market was hit hard on Thursday after a dismal export sales report, but the rally in crude oil may have lent some support on ideas it increases the cost to produce polyester. This is a two-edged sword, however, because higher energy costs also stress the global economy, upon which textile demand depends. Recoveries in the stock indices overnight may have also lent support  to cotton. West Texas is not expected to seem much rain over the next week to 10 days, which will stress some of the crops. World Weather Inc. said precipitation was sporadic and highly variable over the weekend. Many areas still have need for significant rain while others are getting by on the recent thunderstorms. Other US production areas are in varying condition. This afternoon’s Crop Progress report will offer some clues. Last week’s update showed 44% of the US cotton crop was rated good/excellent, down from 46% the previous week, 54% a year ago and a five-year average for this date of 48%. Texas was 30% G/E, down from 36% the previous week, 45% a year ago, and a five-year average is 35%. Mississippi was another trouble spot at only 39% G/E versus 61% on average. Moisture levels are improving; last week’s Drought Monitor showed an area representing roughly 46% of US cotton production was experiencing drought as of July 14, down from 55% the previous week and the best so far this year.

SUGAR

October Sugar was higher early Monday after bouncing off the 0.618 retracement of the rally from the June low to the July 8 high. Part of the rally may have been off renewed concerns over the beet crop in Western Europe. World Weather Inc. does not expect the region to see any of drought relief in the next ten days. There is also some concern over dryness in sugarcane areas of southern India, with little rain expected over the next two weeks. Northwestern areas should see timely rains in the second half of this week and into the weekend. Southern Thailand remains a little too dry and needs greater rain. The US Sweetener Users Association asked the US government on Friday to allow more lower-tariff sugar imports, saying domestic supplies fell below the level considered by the administration as adequate. On the other hand, US sugar producers are asking for the opposite. The American Sugar Alliance said imports of sugar over the current quotas are excessive and are depressing local prices.

COFFEE

Safras & Mercado reported on Friday that Brazil’s 2026/27 coffee harvest advanced at a moderate pace last week. Isolated rainfall disrupted fieldwork in some regions. They reported that 64% of the planted area had been harvested as of July 15, up from 58% a week earlier but below the 77% at this time last year and behind the five-year average of 70%. Arabica was 54% harvested versus 67% a year earlier, and robusta was 84% versus 93% a year earlier. Last week Brazil’s coffee export data showed sharp increased from year ago levels. Concerns persist that El Nino will dampen the flowering and cherry setting stages of the 2027 crop this fall. World Weather Inc. said on Sunday that Brazil coffee areas will see some rain from Parana into Sao Paulo later this week, which includes some arabica areas. There is no risk of threatening cold anytime soon. There is an ongoing concern about dryness in Indonesia, and no significant change is forecast this week. Old crop supplies remain very tight.

COCOA

September Cocoa was back near Thursday’s low early Monday and after seeing some mild support on Friday off better than expected cocoa grind data for North America in the second quarter. The North America grind came in at 109,659 metric tons, +7.7% from the same period last year. This brought the total second quarter grind for Europe, Asia, and North America to 650,671 tons, +6.1% from last year. This is still the second lowest since 2020. In 2022 the combined grind reached a record 708,875 tons. Asia’s second quarter grind was 224,646 metric tons, +25.1% from to the same period in 2025, but Europe’s was -4.6% from a year earlier to 316,366 metric tons. World Weather Inc said on Sunday night that showers and thunderstorms are expected periodically through the next ten days in west-central Africa. A few areas in Ivory Coast and central Ghana may receive less than usual rain, with southern Nigeria and western Cameroon the wettest. The concerns that popped up last month over too much rain have eased as Ivory Coast arrivals have picked up. El Nino still threatens to disrupt the main crop in the fourth quarter.

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