Drought Fuels Cotton Surge

COTTON

July Cotton was up again early Thursday, reaching its highest level since May 2024. The nearby contract was the highest since May 2025. The weekly export sales report this morning showed net cotton sales for the week ending April 9 at 161,101 bales for the 2025/26 (current) marketing year and 26,863 for 2026/27 for a total of 187,964. This was down from 333,631 the previous week. Cumulative sales for 2025/26 have reached 10.409 million bales, down from 10.553 million at this time last year and below the five-year average of 12.515 million. Sales have reached 92% of the USDA forecast versus a five-year average of 101% for this point in the marketing year. Shipments totaled 305,029 bales, down from 342,744 the previous week. Vietnam was the largest buyer at 82,838 bales, followed by Turkey at 55,158. Dry conditions in the US cotton belt continue, with roughly 97% of US production in an area under drought as of Tuesday up from 95% last week. There are better chances for rain in the next couple of weeks, with above average expected across the cotton belt in the 6-10 and 8-14 day forecasts. Oil price rise also supports cotton, but peace talks could undermine oil’s support, but new highs in the stock market help support demand ideas, and the dollar falling to its lowest since March 2 overnight helps US export prospects. El Nino is expected to pull India’s monsoon below average, which could lower their cotton production.

COCOA

July Cocoa was lower early Thursday after the European first-quarter cocoa grind data came in at 325,852 metric tons, -7.8% from a year earlier. This was not a total shock and was close to the expectations based on analyst polls, but the rally of the previous two sessions left the market open for some sort of correction. Germany’s first quarter grind was -6.7% on the year to 90,852 metric tons. Later in the session, Asia’s first quarter grind came in at 223,503 metric tons, +5.2% from the same period last year. This was counter to expectations that grind would be the lowest in several years, but it should not have been a total surprise after Malaysia reported an 8.7% increase on Wednesday. The North American grind to be released later today is expected to come in lower as well.

COFFEE

July Coffee sold off sharply early Thursday in what could have been a reaction to the Safras & Mercado report earlier this week in which they raised their forecast for Brazil’s 2026/27 coffee crop to 75.65 million bags, up 4.65 million from their previous estimate and up 17% from 2025/26. This was led by arabica production, which is expected to be +29% from 2025/26. As of this week, Brazil farmer sales of new crop coffee had reached only 14% of the expected production versus 23% for this time of the year, so perhaps the revised estimate encouraged more sales. The arabica harvest is expected to begin next month. Reuters reported that Vietnam prices edged higher this week but domestic trading remained subdued. A trader in the Central Highland of Vietnam said farmers were not selling.

SUGAR

July sugar was slightly higher early Thursday but near Wednesday’s low. Tereos, one of the world’s largest sugar producers, said on Wednesday it expects to crush 18 million metric tons of sugarcane in the 2026/27 season in Brazil, steady from the previous cycle. This seems to run counter to expectations for lower sugar production out of Brazil this year due to an increase in ethanol production. The USDA attaché in Australia has forecasted that nation’s sugar production to increase by 9% to 4.18 million metric tons in 2026/27, up from an estimated 3.83 million tons in 2025/26. The expected arrival of El Nino later this summer has lowered expectations for the Indian monsoon, which could lower their sugar cane production as well, and weather models suggest this year’s editions will be strong.

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