US’s Biggest Cotton Buyer Hit with 46% Tariff

COTTON

The cotton market was sharply lower overnight in the wake of the tariff announcements. Vietnam is the largest buyer of US cotton for the 2024/25 marketing year and they were hit with a 46% reciprocal rate in the announcement yesterday. Last week’s export sales report showed net sales of 126,029 bales for the week ending March 20 (current and new crop combined), which was the lowest since September. However, the market still reacted positively to the report because shipments were still strong at 393,407 bales (second highest of the marketing year). The market has given back its gains from the supportive acreage report on Monday.

COFFEE

May Coffee is lower this morning and approaching Tuesday’s four-week lows. Unlike the cocoa market, coffee may be more focused on the prospect of reduced demand if the global economy is rocked by the tariffs. The market has been in a sideways pattern since putting in an all-time high in February, and it has yet to experience a sharp correction, so it may be more vulnerable to demand concerns. On the other hand, a strong Brazilian real reduces the incentive for Brazilian exporters to sell. The real reached its highest level since March 20 yesterday and will likely exceed that today in the wake of the collapse in the dollar overnight. The March 20 high was the highest since October. Brazil’s reciprocal tariff rates were relatively small at 10% versus 46% for Vietnam and 32% for Indonesia. Brazil is the world’s largest producer of arabica coffee and the second largest for robusta. Vietnam is the largest producer of robusta, and Indonesia is the third largest. World Weather Service is still painting an uncertain weather outlook for Brazil. A short-term boost in precipitation is expected today and tomorrow before drier weather returns over the weekend and into next week. The rain not expected to be enough to counter evaporation on most days. In an update published yesterday, S&P Global put Colombian October-January green coffee exports at 4.569 million bags, up from 3.893 million for the same period last year. Total exports for 2024/25 are forecast at 11.6 million versus 10.655 million last year. This puts current exports at 39% of the forecast versus 37% at this time last year. S&P Global has Colombia’s 2024/25 ending stocks at 3.378 million bags versus 3.125 million last year.

COCOA

May Cocoa extended yesterday’s rally overnight and traded to its highest level since it collapsed on February 21-22. So far, the market has ignored the potential impact the new US tariffs could have on consumption, possibly because it has already confronted the prospect of reduced demand after prices reached all-time highs last year and that it already saw a steep selloff earlier this year. Now the cocoa market is faced with sharply lower production for Ivory Coast, the world’s largest producer. Ivory Coast raised the fixed farmgate price this week by 22% to 2,200 CFA francs ($3.65) per kg for the mid-crop. Sources in the government said the nation was about to experience its worst mid-crop output “in the last 10 years” due to an unusually long dry season. The USDA attaché this week released a report estimating Ghana’s 2024/25 cocoa production at 700,000 metric tons, up from 530,000 in 2023/24 (+32%). The report credited improved tree management, better weather conditions ,and more adequate quantities of insecticides being provided by the Ghanaian government. The USDA number is 100,000 tons higher than the ICCO’s forecast in their quarterly update at the end of February. World Weather Service expects periodic showers and thunderstorms in west-central Africa through the next week. The precipitation will be beneficial and should be light to moderate most often. Much of Ghana and parts of Cameroon have seen light to moderate rainfall over the last 24 hours, with some locally heavy amounts.

SUGAR

May Sugar is lower this morning but inside yesterday’s range-up move. The market may be under pressure from a risk-off mood that has emerged in the wake of the tariff announcement yesterday afternoon. Sharply lower crude oil prices don’t help either, as that theoretically reduces the incentive for cane processors to crush for ethanol. Sugar may be drawing support from the Brazilian real, which reached its highest level since March 20 yesterday, as that lowers the incentive for Brazilian crushers to sell sugar for export. Yesterday the sugar market was supported by a report from the Brazilian producers’ group Orplana that put Brazil’s center-south 2025/26 sugarcane crop at 605 to 618 million metric tons, is lower than the standing cane produced in the 2024/25 season of around 630 to 640 million tons.

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