Tariff Exemption Proposal Pressures December Coffee

COFFEE

December Coffee is under pressure this morning a report from The Washington Post that US lawmakers Don Bacon and Ro Khanna plan to introduce bipartisan legislation that would exempt coffee products from any tariff imposed after January 19, 2025. That exemption would apply to roasted and decaffeinated coffee, as well as coffee husks, skins, and other drinks or substitutes containing coffee. If this measure passes (and survives a veto), it would ease concerns about supply in the US and may even coax Brazilian growers into selling their newly harvested crop. This announcement follows a steep selloff earlier this week after ICE raised its margins and sparked heavy long liquidation, technical disappointment when the nearby contract failed to take out its all-time high from February, and the introduction of rain into the forecast for Brazil for next week, easing concerns about the upcoming crop. World Weather Inc. says a frontal system should bring some of the season’s first significant rain early next week with some follow-up precipitation coming later in the week and the following weekend. They added that the precipitation will be highly erratic initially, but many areas will get at least some of the precipitation. A close watch on its distribution will be warranted until all areas have experienced flowering and pollination.

COTTON

The cotton market is not getting much help from the export sales numbers, as yesterday’s report showed net sales for the week ending September 11 at 186,108 bales for the 2025/26 (current) marketing year and 19,047 for 2026/27 for a total of 205,155. This was up from 129,598 the previous week but it was still below the 244,971 from two weeks ago. Cumulative sales for 2025/26 have reached 3.973 million bales, down from the dismal 4.764 million form this time last year and still the lowest since 2015/16. Sales have reached just 35% of the USDA forecast versus a five-year average of 52% for this point in the marketing year, which suggests there could be revisions lower in the export forecast in future WASDE reports. US crop conditions are relatively strong, and Texas conditions are very strong, but the Delta is struggling, and there is a dry trend developing in the southeast. The weekly Drought Monitor showed 41% of US cotton production was in an area experiencing drought as of September 16, up from 32% the previous week and 3% on August 5. Drought areas expanded in the Delta and southeastern growing regions. Outside of Florida, little rainfall was observed during the past week in the Southeast. This resulted in a fairly widespread expansion of moderate drought (D1) and abnormal dryness (D0) across eastern Alabama, western and southern Georgia, and along the Carolina Piedmont region. However, Texas is the make or break state for the US crop.  World Weather Inc says West Texas rainfall should be restricted over the next ten days with temperatures seasonably warm, which should help to expedite the crop’s development. China’s crop appears to be in good shape. Northern India may have had too much rain.

COCOA

Rains finally arrived in Ivory Coast and Ghana this week, easing concerns about a seasonal dry spell in late summer that overstayed its welcome. The overnight maps showed widespread rains in Ghana over the last 24 hours after they had reached Ivory Coast the previous day. World Weather Inc. said more rain and thunderstorms are likely in key next week in cocoa areas across West Africa. Eventually, all production areas will be impacted multiple times and sufficient rain is likely to improve main season crop development conditions and to induce mid-crop flowering. The improved soil moisture for viewed as beneficial for the main season crops and for the flowering to the mid-crops, but there have been some concerns about black pod disease in Cameroon due to too much moisture.

SUGAR

March Sugar is higher this morning following a bounce off new contract lows yesterday. The market has been under pressure this week from further indications of strong production out of India and Brazil. Reuters is reporting that Indian trade and government said the nation’s India’s exports will not even reach 800,000 tons this season, much less the 1 million-ton quota, with the officials blaming rising Brazilian supplies that have pushed global prices lower. The officials added that this could prompt mills to ask the government to allow exports of the remaining 200,000+ tons in the new season beginning October 1. Earlier this week there were reports that Indian sugar processers were asking the government to allow up to 2 million metric tons for the 2025/26 marketing year, which begins October 1. Sucden even suggested that India could export as much as 4 million metric tons. This week’s UNICA report for Brazilian Center south production for the second half of August came in higher than expected, as the deficit to last year’s output continues to shrink. World Weather Inc. says center south Brazil will get some beneficial rain early next week with some potential for follow up later in the week. The moisture will be welcome, but its distribution a bit erratic.

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