Robusta Under Pressure

COFFEE

March Coffee traded in a narrow range early Wednesday near unchanged from Tuesday and in the lower half Tuesday’s range. London robusta prices fell sharply on Tuesday after a forecast for heavy rains in Vietnam was moderated a bit. The Vietnam Coffee and Cocoa Association said on Tuesday that despite the recent heavy rains and flooding, the nation’s total coffee output for 2025/26 is still expected to rise about 10% from the previous year. However, they warned that any more rain over the coming weeks could affect bean quality. Harvest is about 10% complete. World Weather Inc. said that Tropical Depression Koto will enhance rain over Vietnam’s Central Highlands during the next few days, but not nearly as much as feared late last week. Another tropical cyclone is expected to hit the Philippines Friday/Saturday and produced heavy rain and windy conditions in central parts of the nation. The storm has potential to also bring heavy rain to Vietnam around the middle of next week, but confidence in that forecast was low. Southeast Asia flooding is raising concern for many crops and markets. So far, the impacts have been mostly localized and not necessarily impacting huge crop regions. Brazil coffee areas have received erratic rainfall recently, and a boost in precipitation is desired by some producers, but sufficient rain is expected during the next ten days to maintain a favorable environment for development of next year’s crop. Brazil has entered its rainy season. ICE certified arabica stocks fell 2,295 bags on Tuesday to 408,904. Stocks levels are no longer declining on a daily basis. They are currently up 5,350 from a week ago, but the movement has been choppy.

SUGAR

March Sugar was higher early Wednesday and was back in the vicinity of the 50-day moving average, which it tested last Friday but failed to penetrate. Tuesday’s Commitments of Traders Report showed managed money traders were net buyers of 8,862 contracts of sugar for the week ending October 21, reducing their net short to 153,192. This is still their second-largest net short since November 2019, and it leaves the market vulnerable to aggressive short covering if resistance levels are taken out. At its low, the market was 1.20 cents below the close on October 21, and Tuesday’s close was 0.36 cents below that level.. The French sugar beet grower group CGB said on Wednesday that it expects France’s 2025/26 sugar beet crop to reach around 36 million metric tons, up from 32.8 million in 2024/25, as improved yields offset lower planted area. French sugar production is expected to come in around 4.3 million tons of sugar, up from 4.0 million in 2024/25. Bloomberg reported that representatives speaking at the International Sugar Organization conference in London on Tuesday said European sugar supplies are set to tighten next year as farmers plan deeper cuts to beet plantings in an effort to halt a slide in prices and protect margins. Growers expect to reduce planted area by about 10% for the 2026/27 season. The president of agribusiness consultancy Datagro told delegates at the conference that Brazil can absorb more corn and more cane-based ethanol, one reason being that the proportion of Brazil’s flexible-fuel car fleet using ethanol is currently low, leaving room for ethanol consumption to expand. Earlier this year Brazil raised the mandatory blend of ethanol in gasoline to 30% from 27%, requiring well over 1 billion more liters of ethanol per year. Recent UNICA reports have indicated that Brazilian cane crushers have stepped up their ethanol production. Sugar’s share of the crush fell to 38.2% in the first half November after falling below 50% in October for the first time since April. Ultimately, more ethanol production should ease burdensome sugar supplies. World Weather Inc. says center west and northern parts of center south Brazil are likely to receive significant rainfall during the latter part of this week through next week, which should be sufficient and well timed enough improve crop and field conditions. They added that frequent follow up precipitation will be needed to restore soil moisture down deep into the ground. India’s production is running was 43% higher than year-ago levels during October and November, the first two months of the marketing year.

COTTON

March Cotton was higher early Wednesday and was back in the vicinity of last week’s high. The Dollar Index was sharply lower, and that lent support to cotton on ideas that a weaker dollar will make US cotton exports more competitively priced on the global market. Tuesday’s Commitments of Traders Report showed managed money traders were net buyers of 97 contracts of cotton for the week ending October 21, reducing their net short to 81,245. This is still their second-largest net short on record going back to 2006 and indicates an oversold condition that leaves the market vulnerable to aggressive short-covering rallies is resistance levels are taken out. March Cotton put in a temporary low on October 14, only resume its downtrend and put in a new, lower low on November 21.  Monday’s export sales report showed the US sold 167,742 bales of cotton for the week ending October 23, down from 202,518 the previous week, but still decent. Furthermore, shipments reached a marketing year high of 174,448 bales. China emerged as the number one buyer that week at 35,319 bales, but 22,046 were for next year’s crop. The next update will be on Thursday December 4, and it will cover the week ending October 30. World Weather Inc says eastern Australia summer crop areas will be needing greater rain soon to ensure the best dryland cotton development potential. Favorable harvest weather is likely in California, the US southwestern desert region and West Texas. Fieldwork in the southeastern states may be disrupted periodically by rain. There is also some potential for partial relief from drought in the southeastern states. The next USDA WASDE update will be released on Tuesday, December 9.

COCOA

March Cocoa was near unchanged early Wednesday as the market weight the generally positive outlook for the West African crop against a short-term oversold condition. Ivory Coast farmers interviewed by Reuters this week were upbeat about their crop prospects, saying that above-average rains and long sunny spells in most of the main cocoa regions last week were expected to boost yields for the final stage of the October-to-March main crop. However, there is a long dry season ahead, and the severity of the drying Harmattan winds will determine how strong the main crop will finish. ICE stocks fell another 4,574 bags on Tuesday to 1.694 million, the lowest since March 14. Tuesday’s Commitments of Traders Report showed managed money traders were net sellers of 1,574 contracts of cocoa for the week ending October 21, increasing their net short to 3,601. The previous week these traders had established a net short position for the first time since December 2022, and that short likely got even larger when the market fell below $5000 for the first time in more than year in late November. The next COT update, covering the week ending October 31, will be released on December 5. The ICCO report on Friday projected a global surplus for 2024/25 of 49,000 metric tons, smaller than the previous forecast but not unexpected. Ivory Coast port arrivals totaled 100,000 tons last week, which was the fifth straight week they were above the five-year average.

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