Strong August for Brazil Coffee

COFFEE

December Coffee was lower early Friday but was still holding above Thursday’s nine-week lows. Brazilian industry group Cecafe reported on Thursday that the nation exported 3.82 million bags of green coffee in August, +31.7% from last year and a new record. Arabica coffee exports totaled 2.87 million bags, +25.7%, and robusta shipments were +53.6% at 953,592 bags. The International Coffee Organization is forecasting a record, 3-million-bag global coffee surplus for 2025/26, with global coffee production at 183.6 million bags, +4.4% from 2024/25, and consumption 180.6 million bags, -0.8%. The group put global green coffee exports for July at 10.76 million bags in July, +6.3% from a year ago, thanks to a surge in robusta exports to 4.98 million bags, +32%. Vietnam exports were +87.4%. Global arabica exports for the month totaled 5.78 million bags, -8.9%, with Brazilian naturals -10%. World Weather Inc. expects a favorable period for some flowering and pollination during the next five days in Brazil growing areas. Greater rain will be needed later this month, and some of the medium range forecast models are suggesting this will happen.  Indonesia remains too dry, and crop moisture stress is common and is beginning to impact trees. ICE certified arabica fell 1,995 bags on Thursday to 218,457 their lowest level March 1999.

SUGAR

March Sugar was lower early Friday after trading to new contract highs on Thursday, but it was still inside Friday’s range. The director of strategy and planning at the Office of the Cane and Sugar Board in Thailand said the group is expecting Thailand’s 2026/27 sugar production to fall to 10.5 million metric tons, down 12.5% from 2025/26. They blame drought, higher input costs, and farmers switching to cassava. He added that prices would need to reach around 21 to 22 cents per pound for farmers to cover their costs. Analysts and millers surveyed by Bloomberg put India’s 2026/27 (October-September) sugar output at 29-31 million metric tons. That would be steady to below the 31 million tons ISMA has forecast for 2025/26. Indian mills are seeking to import nearly 800,000 tons of duty-free raw sugar out of the 1.0 million tons the government has allowed. World Weather Inc. said that Indian crop conditions have been better than expected in the face of El Nino, but there is still potential for more significant problems later this year and into 2027 if hot and dry weather dominates. The added that the drier than usual conditions in mainland Southeast Asia have been mostly confined to southern Thailand and central Myanmar where the crop moisture stress has evolved for sugarcane and other crops. Yields will be down for some of these areas, but irrigated crops and those that have seen timely rain are likely to yield well. They also expect losses will be lighter than usual for an El Nino event.

COCOA

December Cocoa was higher early Friday, and it has managed a modest recovery this week in the face of some improvement in the rain patterns in West Africa. El Nino is likely to remain an issue going forward, with it expected to peak in November and last into February, threatening to limit rainfall in the area. World Weather Inc. says Ivory Coast and parts of Ghana cocoa areas have received some timely rainfall in recent days, although some of it has been light.  Cocoa growing regions in Indonesia remains dry. Crop moisture stress is common and is beginning to impact trees after affecting mostly a short-rooted crops in recent months. Relief is highly unlikely, and wild fires will continue to burn out of control.

COTTON

December Cotton was inside Thursday’s range early Friday as the market consolidated ahead of the USDA supply/demand (WASDE) report later in the session. The market has seen some support this week by the rally in crude oil, but this follows a five-day selloff from contract highs. Another supportive factor was the large net long position held by the funds, which left the market vulnerable to short covering ahead of USDA. The export sales report, which will be released earlier in the session is not expected to have much impact on the market, at least until WASDE is released. Last week’s report showed net sales of 27,525 bales for the week ending August 27, all for the 2027/28 (current) marketing year, which was the lowest since August 2024. Cumulative sales for 2027/28 have reached 4.359 million bales, up from 3.657 million at this time last year and below the five-year average of 5.304 million. Sales reached 37% of the USDA forecast versus a five-year average of 45% for this point in the marketing year. World Weather Incl. says west Texas will see two more rounds of rain during the next two weeks that will benefit irrigated crops, but they added that most of the dryland crop has been damaged too greatly by hot and dry weather in recent weeks to benefit from the moisture.

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