Brazilian Growers Reluctant to Sell

COFFEE

December Coffee took out the August high overnight and reached its highest level since putting in a contract high on April 29. Recent revisions lower for the upcoming Brazilian crop have support the market, as have significant drawdowns in ICE exchange stocks due to the implementation of 50% US tariffs on Brazilian imports, including coffee. In recent years, the US got about one third of its coffee from Brazil, and the tariffs have sent US buyers looking for other sources. Brazilian growers are reportedly reluctant to sell their new crop as they wait to see if the tariffs will be held up in US courts. ICE certified stocks increased 3,118 bags yesterday to 695,884, their highest in four sessions. Last week they fell to their lowest level since May 2024. Stocks have increased 17,710 bags in the last three sessions, with 17,160 of them being of Mexico origin.

COTTON

December Cotton was higher overnight on what could be short covering ahead of the USDA crop production and supply/demand reports this week. The weekly Crop Progress report showed 54% of the US cotton crop was rated good/excellent as of September 7, up from 51% the previous week, 40% a year ago and above the five-year average for this date at 42%. This puts the US crop back on par with where it was at the end of July, when it was 54% G/E. The USDA crop production report this week will be as of September 1, so yesterday’s report should have no bearing on their assessment, but, the closeness of the values on August 31 versus July 31 may have also kept USDA from changing their estimates, especially with the ratings being well ahead of average. The largest producing state, Texas appears to be having a banner year, with 48% rated G/E this week, up from 44% last week and the five-year average at 28%. The report also showed 40% of the US cotton crop had bolls open versus a five-year average of 39%, with 8% of the US crop and 19% of Texas having been harvested.

SUGAR

October Sugar took out its July low yesterday and traded to its lowest level since January 2023, but it bounced off its lows and was sharply higher overnight. This is perhaps a case of the market moving too far, too fast. Ample supply has been the theme of late, with Brazil’s production latest UNICA report showing strong production during the first half of August and optimism about Thai and Indian crops in the wake of good monsoon rainfall this year. The market did receive a bit of bullish news yesterday with reports of lower sugar production out of Germany due lower plantings.

COCOA

December Cocoa extended its recent downward trajectory overnight, falling to its lowest level since July 21, as the market seems to be convinced that the upcoming crop will be big enough and demand will be weak enough to keep supplies loose. Ivory Coast port arrivals totaled 7,000 metric tons for the week ending September 7, down from 9,000 the previous week and 12,000 a year ago. Cumulative arrivals since the marketing year began on October 1 have reached 1.679 million tons, down from 1.716 million at this time last year and the lowest for this point in the season in at least six years. Traders are awaiting the arrival of the new crop. Farmers interviewed by Reuters complained of black pod disease, which they attributed to cool and overcast weather during August. Those in coastal and southern regions said more sun was necessary to properly dry their newly harvested beans. In other areas farmers were more upbeat. Harvesting activity is still modest. Ghana received some light rains overnight, but for the most rains are staying north of the growing areas of in Ivory Coast and Ghana.

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