Vietnam Coffee Exports Surge

COFFEE

With a pattern of lower highs looking to extend into the new trading week, signs that fund managers in London recently reduced their long positioning and given the pattern of massive export flow from Vietnam, the bear camp has a convincing case. In fact, Vietnam saw its January through July coffee exports jump by 21% to 1.31 million metric tons. However, the bear camp should take note of the fact that July saw a 287% annual jump in exports with 396,000 tons shipped out. When one combines a neutral near-term weather outlook for Brazilian action with strong physical flows from Vietnam onto the world market, the bear camp should feel confident from the supply side argument. A minor offset to the strong Vietnamese export tally is a 24% year-over-year decline in June Ugandan exports. However, despite the year over year decline, the June export tally from Uganda was the largest monthly export tally since the start of the 2025/2026 crop.

COCOA

The El Niño theme is back in place with lack of rain and too much rain combining to increase the prospects of stress and reduce output in several key production regions. In retrospect, the best description of the current West African growing season is highly variable with excess rain early, periodic lack of sunshine and chatter regarding swollen shoot disease. However, the recent focus on production in Ghana has rekindled El Niño buzz with projections of a 16% decline in their 2026/2027 crop. Given the production threat and Ghana and the enactment of the COCOBOD Bill (where farmers are guaranteed at least 70% of the export price) that could give farmers the willpower to hold out for higher prices with current futures prices sitting nearly 14% below last month’s high and 26% below year ago levels.

SUGAR

The rally in sugar futures to the highest level since July 22nd is given added credence by significant strength in Indian sugar company shares overnight. According to Bloomberg the global sugar surplus is now expected to narrow in the 2026/2027 campaign from 7 million tons last year to only 2.8 million tons this year. Bloomberg cited a 2.3% potential drop in global production to 182.4 million metric tons at the same time they expect consumption to remain level at 179.6 million metric tons. While the narrowing of the annual surplus has been anticipated, even larger production reductions could dramatically narrow the surplus and could even shift the world market into a deficit. Seeing a shift from a substantial surplus into a deficit could easily shift sugar into a full-blown bull market. Even though the markets were already aware of the Brazilian government decision to expand the ethanol blend in gasoline from 30% in July to 32% this month, that should result in lower sugar availability and firm cash markets.

COTTON

While the cotton market posted an impressively higher weekly trade and the highest price since July 23rd, that bullish action has been by today’s definitively lower trade. In fact, with December cotton taking out Friday’s low and open interest falling on last week’s rally, it does not appear as if the bull camp is in control. However, longer-term bull fundamentals of supply and demand remain in place with market predictions that global consumption will overcome output by 1.1 million tons. Not surprisingly, the bullish supply and demand tilt was primarily based on lower production (down 402,000 tons), but it was also bolstered by robust demand (229,000 tons). However, in the near term the focus on production is likely to dominate the cotton trade with hot weather continuing in “Xinjiang” out through August 10th and the trade likely to become very anxious if that hot wave is extended. In fact, Indian cotton demand continues to improve, which is thought to be the main source of strong US export activity. US cotton export readings were 382,000 bales last week up 67,000 bales from the prior week with the preponderance of buying for the 2026/2027 season.

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