Sugar Not Exempt from 25% Tariff

SUGAR

October Sugar was higher early Friday following a selloff on Thursday that took the market to its lowest level in three weeks. While coffee is exempt from the new 25% tariffs the Trump Administration is putting on Brazilian imports, sugar is not, and the market may have sold off in a knee-jerk reaction to that news. UNICA says the US accounted for 420,000 metric tons of sugar exports from Brazil in 2025, the world’s top sugar producer, which was down from 1.12 million in 2024. Perhaps less sugar was at stake than in previous years. The reduction in US production this year is expected to offset by increased imports from Mexico. The US also imported 253 million liters of ethanol form Brazil in 2025, making the US the second largest buyer after South Korea. Perhaps the reduced outlet for Brazilian ethanol will lower the incentive for them to divert more sugar cane crushing to ethanol from sugar. Brazil has also increased its corn ethanol production in recent years.

COFFEE

September Coffee sold off Thursday on Brazil’s coffee export data that showed sharp increased from year ago levels, which was viewed as evidence that the harvest is moving along at a strong pace. The data showed Brazil exported 2.64 million bags of green coffee in June, +14.4% from the same period in 2025. Arabica exports reached 2 million bags, +9.6% from year-ago, and robusta shipments totaled 633,478 bags, +32.7%. Green coffee exports for the entire 2025/26 crop year totaled 34.53 million bags, -16.6% from 2024/25, but the surge in June was an indication that the 2026/27 crop was off to a strong start. This contrasts with ideas that the heavy rains in June slowed harvest. This year is the on-year Brazilian arabica’s biennial cycle, and production is expected to be considerably larger. World Weather Inc. says mostly dry conditions are expected to dominate coffee areas in Brazil through the next week. There is some potential for rain briefly late next week and into the following weekend from Parana into Sao Paulo, although resulting amounts will be quite light. This should be good for harvest. World Weather Inc. also says there should be enough rain in Vietnam’s Central Highlands and northern regions to prevent any area from becoming critically dry. Greater rain will likely be needed later this month and in August to ensure the best rain-fed production potential.  Unusually dry conditions persist in Indonesia and very little change is anticipated during the next week. There could be a higher level of tree stress later this year if the forecasts for a very strong or “super” El Nino are correct.

COTTON

December Cotton sold off on Thursday on very weak export sales numbers and extended lower into Friday. The export sales report on Thursday showed net sales of 34,360 bales for the 2025/26 (current) marketing year and 4,075 for 2026/27 for a total of 38,435 for the week ending July 9. This was not only down from 153,393 the previous week but it was the lowest in since August 1, 2024, when there were next cancellations on the rollover from the previous marketing year. The largest Buyer was Bangladesh at 10,648 bales, followed by Pakistan at 9,478. China canceled 32,000 bales. They have not been a particularly large buyer this year, but news that the Chinese government will be auctioning off state supplies has added to the dismal outlook. Traders also noted that US retail sales for June were up overall but apparel sales were down, as US consumers spent more on gasoline and fuel. World Weather Inc. said scattered showers and thunderstorms are possible over the next few days in West Texas that will favor some of the drier areas. The US Drougt Monitor showed an area representing roughly 46% of US cotton production was experiencing drought as July 14, down from 55% the previous week and the best so far this year.

COCOA

September Cocoa was higher early Friday after the North American second quarter grind data, released after the close on Thursday took some of the sting out of the lower than expected European grind that was released on Thursday. The North America grind came in at 109,659 metric tons, which was +7.7% from the same period last year and was better than an average expectation from am S&P Global poll of analysts that called for it to be -1%. This brings the total second quarter grind for Europe, Asia, and North America to 650,671 tons, +6.1% from the same period last year. This is still the second lowest since 2020. In 2022 the combined grind reached a record 708,875 tons. Asia’s second quarter grind was 224,646 metric tons, +25.1% from to the same period in 2025, but Europe’s was -4.6% from a year earlier to 316,366 metric tons, and that sent prices sharply lower on Thursday.

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