Coffee Hits Six-Week High

COFFEE

December Coffee rallied sharply early Friday, breaking out of a recent trading range and reaching its highest level since September 1. Despite a bumper crop in Brazil and a surge in exports in since August, ICE exchange stocks have barely recovered, which is viewed as an indication that buyers are willing to pay up to rebuild supplies. ICE certified arabica stocks were down 2,971 bags on Thursday to 238,976, their lowest since September 16. The Brazilian currency was down sharply on Thursday to its lowest level since its breakout rally earlier this month, but that did not prevent coffee futures from rallying. El Nino provides underlying support, as the threat of irregular rains leaves open the possibility of a disruptions in output and harvest. A USDA report this week said El Nino will likely adversely affect Brazil coffee production. Uganda exported 737,766 bags in August, down 13.7% from a year earlier, which was blamed on drought.

COCOA

December Cocoa was slightly lower early Friday after the third-quarter North American cocoa grind came in below year ago levels, tempering some of the bullishness from the European and Asian data from Thursday. The North American grind came in at 109,978 metric tons, down 2.5% from the same period last year. The European and Asian numbers showed increases of 3.2% and 25%, respectively. Total grind for the three regions was 691,960 tons, up 9.7% from last year. Cumulative grind for the three regions in the first three quarters of 2026 has reached 1.900 million tons, down from 2.024 million for the same period in 2025 and the lowest since 2017. The five-year average is 2.072 million. There were 14 plants reporting for North America, two less than the same period last year. Keep in mind that Ivory Coast processed 157,446 tons of cocoa during the third quarter, +40.3% from the same period last year. Rain increase in Ivory Coast earlier this week, offering some relief to the dryness there. World Weather Inc. expects an erratic rainfall pattern across west-central Africa during the next week.  Temperatures will be warm biased which will keep evaporation rates strong when rain is not falling.

COTTON

The USDA export sales report this morning was unimpressive, with net cotton sales for the week ending October 8 at 146,892 bales for the 2027/28 (current) marketing year and 7,182 for 2028/29 for a total of 154,074. This was down from 221,128 the previous week and the lowest since September 10. Cumulative sales for 2027/28 have reached 5.249 million bales, up from 4.571 million at this time last year and below the five-year average of 6.288 million.  Sales have reached 45% of the USDA forecast versus a five-year average of 54% for this point in the marketing year, which suggests the USDA will eventually lower its export forecast if this pattern does not change. Shipments for the week totaled 140,561 bales, down from 161,588 the previous week. World Weather Incl. says west Texas cotton areas are expected to see several days of drying, to be followed by a new bout of rain mid to late next week that may once again raise concerns over fiber quality. The Delta and southeastern states will be dry for much of the coming ten days to two weeks, which will improve harvest conditions . Industry officials told Reuters that India’s purchases of US cotton are likely to slow in the coming months with the arrival of the newly harvested crop and the expected end of an import duty exemption that was put in place earlier this year to increase domestic supplies. Indian purchases of US cotton are up 81% from last year.

SUGAR

March Sugar was lower early Friday as the market appeared to be backing off from this week’s contract highs. Sugar prices have drawn support in recent weeks from excessive and untimely rains in Brazil that slowed production and reduced the sucrose in the cane. Brazil government data on Thursday showed center-south sugar production fell 6% in the second half of September to 2.86 million tons. Crush was down 2.9%, and ethanol production was down 9.5%. Conditions have turned drier over the past week, but World Weather Inc. is saying that after a dry period over the next several days, more rain could fall in Parana and Sao Paulo that could slow harvest again. The outlook for Thailand is mixed, with northeastern areas expected to see net drying conditions over the next ten days that may eventually deplete soil moisture and raise a little concern for cane crops, while western areas of the nation are expected to continue to receive routinely occurring rainfall that will leave soil moisture and crops rated well. Thailand has been the second or third largest exporter in recent years, and it could be vulnerable to drought stemming from El Nino, though historically they have been less threatened than Indonesia. Last week’s Commitments of Traders report showed that the fund net long was in the vicinity of all- time highs, which raises the possibility of long liquidation selling if support levels are taken out.

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