December Cotton Higher on Trade Hopes

COTTON

December Cotton extended last week’s recovery rally overnight and trade to its highest level since October 9. The market closed above the 9-day moving average on Friday for the first time since September 18, which likely sparked some additional short covering. President Trump said on Friday that his proposed 100% tariff on goods from China would not be sustainable, and he confirmed that he would meet with Chinese President Xi Jinping in two weeks in South Korea. There has been talk of a meeting, but this “confirmation’ was the most promising news so far that some sort of trade agreement could be reached. China has been a major buyer of US cotton for the past couple of 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 and a five-year average of 1.697 million. Total US sales for 2025/26 (as of September 18) had reached 4.059 million bales, down from 4.871 million at this time last year and the lowest since 2015/16. Sales had reached 36% of the USDA forecast versus a five-year average of 53% for this point in the marketing year.

COCOA

Third quarter grind data was released last week from the three major regions (Europe, Asia, and North America) and on the whole, they were not as low as feared. Asia’s grind was down 17% from a year ago, a little worse than expected. North American grind rose to 112,784 metric tons, +3.2% from a year ago versus expectations for -5% to -8%. Two more plants contributed to the North American data this year, which partly explains the increase. Europe’s decline was smaller than expected at -4.8% from a year ago. Industry sources told Reuters last week that cocoa purchases in Ivory Coast have stalled, as buyers and exporters have been deterred by high farmgate prices and poor quality stocks. Apparently banks are reluctant to provide financing. This year’s main crop production is expected to be similar to the last year, pod counters and exporters told Reuters, but the first part of the harvest could be lower due to the dry conditions in August. Improving conditions since then have also helped send the market lower. Port arrivals have started out slow, and traders may start to watch the those numbers closely.

SUGAR

March Sugar was higher overnight after a selloff on Friday that took the market to its lowest level since Tuesday, when it made a new contract low. The market has been consolidating since that date but has struggled to mark any type of short covering rally. Data over the weekend showed China imported 550,000 metric tons of sugar in September, up 36% from the same period last year. This brought cumulative imports for 2025 to 3.160 million, up 9.4% from last year. Last Thursday’s UNICA report showed Brazilian Center South sugar production for the second half of September at 3.137 million metric tons versus expectations of around 3.050 million. While slightly bearish against expectations. the market did not break on the news that day, as it was not a dramatic departure from the trend of recent reports. Sugar’s share of crushing for the period was 51.2%, down from 53.5% for the first half of the month but up from 47.7% a year ago. The slow start for the rainy season in Brazil may start to raise concerns about the upcoming crop. The region usually sees a pattern of pre-monsoonal rainfall develop in late September or early October, but rains have been light so far this year.

COFFEE

December Coffee gapped higher overnight, putting last week’s high at 418.50 in its sights. The slow, uneven start to the rainy season in Brazil and the resulting delays in flowering, pollination, and cherry setting continues to be a concern for the upcoming crop. World Weather Inc. says precipitation was erratic and light over the weekend as expected and that dry or mostly dry conditions will continue this week. A new front could move across the region next weekend and into first half of next week, which would leave some of the northern parts of the region dry until October 28 or 29. It is difficult to determine how well flowering has occurred this year, but World Weather, Inc. believes it has been uneven and that some groves have not had enough rain. Other parts of the production region flowered, but have not had very good follow up moisture for pollination and cherry setting, leaving a mixed outlook. US and Brazilian officials held trade talks last week that the two sides called positive, and they agreed to work to schedule a meeting between President Trump and his counterpart Luiz Inacio Lula da Silva “at the earliest possible occasion.”

Interested in more futures markets?  Explore our Market Dashboards here.