Coffee Gains Amid Tight Supply

COFFEE

December Coffee is higher this morning and has back approaching last week’s high. The possibility that the 50% tariff on Brazilian Coffee imports could be lifted may be preventing Brazilian growers from aggressively selling their new crop and may have the effect of compounding an already tight supply situation. The trade is waiting for the next development in the tariff saga after US and Brazilian said last week that they had agreed to work to schedule a meeting between President Trump and the Brazilian President “at the earliest possible occasion.” ICE certified stocks increased yesterday for the first time in 23 sessions. They were up 1,300 bags to 468,410 after falling to their lowest level since March 13, 2024 on Friday. Brazilian growers may also be getting impatient for rain to get new crop to get off to a decent start. World Weather Inc. says most of Brazil will remain dry-biased for the rest of this week, but rains are expected to increase in southern Brazil in the first half of next week as a cold front lifts to the north and that more of an increase is likely in center west and center south Brazil in the first week of November. Based on weather observations, World Weather Inc is of the opinion that flowering has been uneven and that some groves have not had enough rain to induce any flowering at all. Other parts of the production region flowered, but have not had very good follow up moisture for pollination and cherry setting. Tropical Storm Fengshen is moving towards the Vietnam coast and has the potential to produce heavy rain and flooding and landslides as it moves inland, with some possible damage to crops. The next week to ten days is expected to bring “nearly relentless” rain.

COTTON

With the government shutdown continuing, there are no updates on US crop conditions or harvest progress.  As of the last report, the crop was 16% harvested on September 28, which was right on the five-year average. Projecting that average pace out through Sunday would put the crop at 37% harvested as of October 19. The crop had 67% bolls open versus 69% on average, 2% behind. Based on those estimates, the would be 89% open now versus 91% on average.  US Treasury Secretary Bessent said that he expects to meet with Chinese Vice Premier He Lifeng in Malaysia to try to forestall an escalation of US tariffs on Chinese goods. Over the weekend, President Trump confirmed that he would meet with Chinese President Xi in South Korea in two weeks. China has not been a major buyer of US cotton for the past couple of years, and this year is the slowest in at least 11 years. The last US export sales report released before the government shutdown showed that as of September 18, China had purchased 70,000 bales so far for 2025/26 versus 462,000 million that point in 2024/25, 1.625 million in 2023/24, and 1.085 million in 2022/23. The  five-year average is 1.697 million. Given how poorly sales have gone so far, there may be room for China to agree to buy some US cotton once an agreement is reached. However, the main focus the negotiations, if there are any, is likely to be on soybeans.

COCOA

December Cocoa is consolidating after a $3200, 26% decline in a little over two months. This decline has come amid a good turn in the weather in West Africa and reduced demand expectations. Ivory Coast port arrivals are off to a slow start, but this may be due to the delayed return of seasonal rains last month, and that could change as the season advances. Port arrivals for the week ending October 19 totaled 84,000 metric tons, up from 48,000 the previous week but down from 93,000 for the same week a year ago. Cumulative arrivals since the marketing year began on October 1 have reached 132,000 metric tons, down from 193,000 at that point last year and below the average of the previous five years at 232,000. It is the slowest in at least five years. Ivory Coast farmers interviewed by Reuters this week said that a mix of light, mostly below-average rains and sunny spells last week will be good for production out through at least January. The recent periods of sunshine have aided in the drying of newly-harvested beans. They also reported many large pods close to maturity, with harvesting set to ramp up from early November to January. World Weather Inc expects routine showers and thunderstorms through the next week across the West African growing regions, which is viewed a beneficial for the crop.

SUGAR

March Sugar has been in a sideway pattern for the past six sessions, managing to avoid testing the October 14 contract low at 15.36. The dominant factors in the decline has been the forecast for a significant global surplus this year off strong crops in Thailand and India, a recovery in Brazilian production, and the better than expected beet crop in Europe despite lower plantings. There has been no update on India’s export allowances, with the last news from several weeks ago that producers had asked to see the quota increased to 2 million metric tons in 2026, up from 1 million in 2025. There were also indications that that India’s 2025 exports will come up short of the allowed 1 million. The latest estimate from Brazil showed their cumulative sugar production was up 0.8% from last year even though cane crush was down 3.0%. Ethanol production was down 8.8%. There was a story last week that Brazilian crushers were starting to focus more on ethanol this month in order to help rebuild the nation’s ethanol stocks. This may show up in the next UNICA report. However, Brazil was also supposed to be switching to corn as a feedstock instead of cane for ethanol production. Crude oil is slightly higher this morning, but the recent selloff to five-month lows makes ethanol production appear less lucrative, but this is offset by sugar prices hovering near four-year lows. World Weather Inc says Center-South Brazil could see rains increase in the first week of November. This may slow harvest, but it could also benefit next year’s crop.

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