Freeze Unlikely in Key Growing Areas

COFFEE

September Coffee has found tentative support at the 0.362 retracement of the rally from the January 2023 low to the April contract high this week. Up to this point the market has been under pressure from increased robusta supplies stemming from the advancing harvests in Brazil and Indonesia that has sent London robusta prices to their lowest level since last July. The Brazilian arabica harvest is underway, but it is not expected to be as strong as last year, though analysts have revised their forecast higher from previous levels. The market drew some modest support this week from a forecast calling for of cold temperatures in key growing areas of Brazil, but so far there does not appear to be any major threat to coffee trees. World Weather Service said yesterday that temps this morning could be cool enough for a patch or two of soft frost. No hard or damaging frost is expected and freezes are unlikely in any of key production areas. Preliminary reports of the lows this morning showed one station that reported -1 degrees C. All other stations were above 0. WWS says no damaging cold occurred in coffee areas. Temperatures did slip low enough that a few patches of soft frost may have occurred in a few minor production areas, but nothing that should have impacted the crops in a negative manner.

COCOA

September Cocoa was slightly higher overnight as the market continued to assess the prospects for the upcoming crops in West Africa in light of the ample rains that have reached the area over the past couple of months. While the rain has been viewed as beneficial for the most part, traders are wary that too much rain and not enough sun could cause disease problems. According to World Weather Service, isolated to scattered showers brought rain to parts of the region from Ivory Coast to southeastern Nigeria and Cameroon earlier this week, where resulting rain was light to locally moderate. The overnight maps showed a similar pattern over the past 24 hours. Routine rainfall is expected from Ivory Coast to Nigeria and Cameroon during the next week.  Farmers interviewed by Reuters this week said dry conditions last week were good for pod development, which would seem to puts off the disease fears for a while. The market is also seeing some short covering after the heavy selling on Friday.

SUGAR

October Sugar is higher this morning but inside yesterday’s range. So far, the market has respected last week’s low, which may have been overdone on the ample monsoon rains/high Asian production theme. A forecast for below average rainfall for southern India over the next couple of weeks may have reminded traders that the cane crop is not made yet. The next UNICA report on Brazilian production should be released late this week or early next. The last report showed Brazil Center South production for the second half of May was up 9% from the same period last year. Cumulative production for 2025/26 (which began April 1) was down 12%.

COTTON

December Cotton is higher this morning, inside yesterday’s range up action. For the acreage report on Monday, the Reuters poll has an average trade expectation for US cotton plantings is 9.735 million acres, with a range of expectations from 8.800 to 9.985 million. This would be down 1.3% from the March intentions number of 9.867 and down from 11.138 million last year. Over the last 25 years, the June acreage report has shown an increase over the March report 12 times and a decrease 13 times. The average increase was 5%, and the average decrease was also 5%. World Weather Service expects West Texas to see periodic rainfall over the next week before drier and warmer weather reemerges. Much of the Southeastern US, including the Delta, is expected to see moderate to heavy rains this week, which could further delay plantings.

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