Cotton Stalls Near Lows

COTTON

March Cotton managed a bounce off contact lows on Monday and was trading back and forth inside that day’s range early Tuesday, as it appeared that traders were expecting physical buying to step in at the lower prices. There currently no demand support to drive the market higher. There were a couple of strong weeks of export sales report, but the sales pace for the marketing year is slow, and with cumulative sale only reached 67% of the USDA forecast for the entire year versus an average of 82% at this point in the season, there is little for the bulls to cling to. It is still a bit early to worry about soil conditions for the upcoming US crop, but an area representing with 80% of US cotton production under drought, rain will be needed ahead of plantings. Last week’s winter storm may have helped a bit. The USDA Outlook Forum on February 19-20 will provide an initial view on this year’s plantings.

COCOA

March Cocoa was higher early Tuesday after the market managed find support at Friday’s contract lows. Ivory Coast port arrivals are still down, buyers are not buying, and there are reports of large supplies building up in the country. Governments are in a quandary over what to do about their guaranteed farmer prices, and buyers are demanding a break. Futures may have reached low enough levels to attract hedgers yesterday. Ivory Coast port arrivals totaled 33,000 metric tons for the week ending February 1, down from 38,100 the previous week and 47,000 a year ago. Cumulative arrivals for the 2025/26 marketing year, which began October 1, have reached 1.233 million tons, down from 1.290 million a year ago and a five-year average of 1.345 million. The slow arrivals pace may have more to do with the lack of buyers than the lack of available cocoa. Ivory Coast farmers interviewed by Reuters said no rain fell last week in most of Ivory Coast’s cocoa regions, that there was a mild Harmattan wind, and that more moisture was needed to boost the April-September mid-crop. Most farmers said that as it was very hot and that more rainfall was needed to help flowers appear on trees and to help them turn into small pods. They also said there were many young fruits on trees that needed adequate moisture for their development. World Weather Inc. also says the Harmattan wind has picked up a bit but it remains mild. If anything, the drier conditions are welcome after the above average rains in December and January. The non-profit Enveritas said in a report that swollen shoot disease is worsening in Ivory Coast. In a survey of more than 11,600 cocoa farms, they found more than 41% of them infected with the virus in the 2024/25 season versus 33% two seasons prior. According to Enveritas, the disease reduces yields by approximately 35%, putting some 15% of Ivory Coast’s cocoa at risk.

COFFEE

This week’s break below a five-month consolidation could set the market up for a substantial selloff, perhaps to back to the July lows. Brazilian weather has been mostly conducive to a good crop. Decent rains over the past couple of months, including some active rainfall in January, are setting the trees up for good cherry development. There was a dry spell a couple of weeks ago that raised some concern, but ample rains returned this weekend. World Weather Inc. said rain was broadly distributed across Brazilian coffee production areas over the weekend and that frequent shower and thunderstorm activity is expected through the next ten days. All production areas will be impacted at one time or another and sufficient amounts will occur to support long term crop development. Agronomists caution that the season is not over yet, but prospects appear to have taken a positive turn. This is the on-year in the biennial cycle for the Brazilian arabica crop. Uganda’s agricultural ministry reported yesterday that the nation exported 502,582 bags of coffee in December, up 21.7% from December 2024.

SUGAR

March Sugar was higher early Tuesday after managing to avoid a test of the November lows on Monday. The market has regained much of  what it lost on Friday when several commodities felt the pressure of the selloff in the metals. Czarnikow reported yesterday that Brazilian sugar mills had hedged only slightly more than 20% of their expected raw sugar sales for 2026/27 versus 40% at this time last year and nearly 70% two years ago. They estimate that the cost of sugar production in the Brazilian center-south is around 16.3 cents per pound, which is significantly higher than where the March futures settled on Monday (14.26). They increased their 2026/27 cane production  forecast to 621 million tons from 610 million previously, due to favorable weather, but they also revised their sugar mix projection to 48.3% from 50.5% previously, resulting in a 700,000-ton drop in sugar production to 40 million. DATAGRO is forecasting Brazil center-south sugar production at 40.9 million metric tons for 2026/27, up from 40.77 million in 2025/26. They put cane production at 628 million tons, up from 610.5 million in 2025/26, and the sugar mix at 49% versus 50.7% this year.

Interested in more futures markets?  Explore our Market Dashboards here.