Colombian Coffee Output Falls

COFFEE

December Coffee is chopping around, having attempted to take out Wednesday’s six-week high overnight but then turning lower on the day. On Wednesday the market closed a gap from July 6-7 but did not test the six-month high at 341.80 from July 6. Colombia’s Coffee Growers Association put the nation’s coffee production at 1.06 million bags in July, down from 1.37 million for the same month last year and 1.3 million in June. Exports totaled 992,000 bags in July, down from 1.17 million bags a year ago. Their 12-month production is 12.7 million bags, down 13% from a year ago. World Weather Incl does not expect much precipitation to reach Brazil growing areas for the next several days, although there is some potential for greater rain during the middle to latter part of next week. Vietnam saw heavy rain and some flooding in some northern production areas this week but much of the Central Highlands received light to moderate rain. Indonesia remains dry, and any rain over the next week to ten days will struggle to countering evaporation. At this point, Indonesia is feeling the brunt of El Nino-induced dry conditions, while it has not really shown up in Vietnam, but growers in Vietnam remain concerned.

SUGAR

October Sugar traded to its highest level since May 2024 on Thursday but left a spike high that suggested some level of exhaustion was setting in. At its peak the market had gained 3.89 cents (27%) in just three weeks, so some sort of correction could be warranted. There were suggestions that high prices had inspired hedging by Brazilian mills. News this week that the Indian government  will allow duty-free imports of 1 million metric tons between now and October 31 was another indicator of tightening global supply. This news came after a week suggestions that this would happen, so it may have been a case of “selling the fact.” Conab forecast Brazil’s 2026/27 sugar production at 42.9 million metric tons in 2026/27, which would be down 2.9% from 2025/26. The sugarcane crop is expected to be up 4.7% at 705.2 million metric tons. This comes after reports of significant drops in sugar production for June and July after heavy rains hit the key Center-South region. A trend toward more crushing for ethanol is a reason given for the decline in sugar production versus the jump in cane output. However, the tendency to focus more on ethanol may be mitigated by the jump in sugar prices.

COCOA

December Cocoa was lower Friday morning but inside Thursday’s range. The market has garnered support recently from lower forecasts for Ghana, but it is still inside the consolidation range established in July. COCOBOD this week put the 2026/27 Ghana cocoa crop at 650,000 metric tons, which would be down 13% from 750,000 MT last year. The estimate is based on pod counts. El Nino presents an ongoing threat to the 2026/27 crops in West Africa and southeast Asia because of dryness and perhaps to Ecuador on the threat of too much rain. The 2025/26 crop in Ivory Coast looks strong, with best arrivals pace in three years.

COTTON

December Cotton reached a new contract high on Thursday and was in the vicinity of those highs Friday  morning. The US Drought Monitor showed an area representing approximately 44% of US cotton production was experiencing drought as of August 18, up from 40% the previous week and the highest since July 14. This is a reversal from the trend of modest improvements over the previous four weeks. Back in May, that number reached 97%, while a year ago it was 22%. The main support factor has been heat and drought in key US growing areas and the deterioration in US crop conditions. World Weather Inc. says dryland crops in West Texas will continue to deteriorate for the next ten days. The Delta is also unlikely to see much rain leading to some increase in crop moisture stress. Monday’s Crop Progress report may show further declines in conditions.

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