Coffee Prices Slip After Wednesday’s Selloff

COFFEE

December Coffee was lower early Thursday following a selloff on Wednesday that came after the market reached highest level since September 1 but then failed to close a gap on the chart. Brazil growing areas have seen an increase in rain and slightly cooler conditions this week after some hot and dry weather last week, and this eases some concern that may have developed around the upcoming crop. Northern Minas Gerais and northern Espirito Santo into Bahia are not likely to see much rain for the next ten days to two weeks, which is not unusual in El Nino events. Earlier this week, Brazilian government data showed the nation exported 3.93 million bags of green coffee in September, the highest in 20 months and up 20.4% from September 2025. Colombia’s National Federation of Coffee Growers is forecasting that 6.3 million bags of coffee will be harvested in the second half of 2026 and that combined with the 5.6 million bags in the first half will bring the total harvest for the year to least 12 million bags, approximately 12% lower than 2025. They attribute lower forecast to El Nino which will affect not only the quantity but also the quality of the beans in several regions. ICE stocks fell 1,276 bags on Wednesday to 253,251, their lowest since September 28.

COTTON

December Cotton traders are likely cautious ahead of the USDA supply demand report on Friday, which is expected to show a slightly tighter setup than the September report. The weekly export sales report this morning showed US cotton sales for the week ending October 1 at 165,070 bales for the 2027/28 (current) marketing year and 56,058 for 2028/29 for a total of 221,128. This was down from 241,727 the previous week, but it was still better than where they were four weeks ago, even if it was not particularly impressive. Cumulative sales for 2027/28 have reached 5.102 million bales, up from 4.413 million at this time last year and below the five-year average of 6.172 million. Sales have reached 44% of the USDA forecast versus a five-year average of 53% for this point in the marketing year. Shipments totaled 161,588 bales, up from 149,507 the previous week. The slower than normal pace of sales relative to the forecast suggests USDA may lower their export forecast in upcoming reports, but it may be a bit early in the season for them to take that step. Vietnam was the largest buyer this week at 61,750 bales, followed by Pakistan at 45,863 and China at 36,686. China has emerged as a decent buyer the past couple of week. however, this week’s sales consisted of net cancellations of 7,404 for 2026/27 and net purchases of 44,090 for 2027/28. Hurricane Isaias is expected to bring 1-4 inches of rain into much of the southeast and perhaps the Delta, which could slow harvest and damage fibers. Landfall is expected early Saturday. Parts of the southeast are already waterlogged.

For the USDA supply demand report on Friday, a Bloomberg poll has an average expectation for US 2026/27 production at 12.97 million bales (range 12.20-13.60) versus 13.20 in the September update. US exports are expected to come in at 12.18 million bales versus 12.30 million in September, and ending stocks are expected around 3.46 million bales versus 3.60 million in September. World ending stocks are expected at 69.58 million bales versus 69.86 million in September.

COCOA

December Cocoa was lower early Thursday on follow-through selling from Wednesday. Ivory Coast is seeing some welcome rain this week, and this changes the tone a bit from the dominant story of the lack of rain in recent weeks. El Nino still looms, and there may be more instances where concerns over dry conditions take hold. The Ghana Cocoa Board (COCOBOD) has secured $288.02 million through the issue of short-term debt on the domestic market, and this should allow the regulator to boost purchases from farmers and perhaps stem concerns about supplies not reaching the market. World Weather Inc. says periodic shower and thunderstorm activity will continue through the next week across West Africa, but not as wet as earlier this week. More is still needed before the rainy season ends in November. ICE cocoa stocks increased 10,574 bags on Tuesday Wednesday to 3.550 million, their highest since June 5, 2024.

SUGAR

March Sugar was lower early Thursday but inside Wednesday’s wide range. At Wednesday’s peak, the market had gained 3.22 cents (+18%) since September 22 and 6.57 cents (44%) since the June low, which may have left the bulls feeling a bit exposed. While not surprising, sugar production forecasts continue to come down. The International Sugar Organization said in a report on Wednesday that Brazil center-south sugar production likely to fall short of the 39 million metric tons that they forecast six weeks ago. The USDA Foreign Ag Service expects European Union sugar imports to rise 10% to 2.2 million tons for the 2026/27 season, which is needed to cover a 19% drop in production this year. In another report this week, USDA FAS said Brazil will produce 42.2 million metric tons of sugar in 2026/27 season, down 300,000 from its prior estimate, citing irregular and atypical rainfall in August and September. And another report put India’s production is at 29.5 million tons, down from the latest official USDA estimate of 33.6 million, citing rainfall deficits and extended dry spells. Excessive rainfall in the state of Maharashtra also caused waterlogging in some fields, further weighing on yields. The Brazilian real is down for the third straight session but is still sharply higher than where it was a week ago. A strong currency is supportive to sugar as it reduces the incentive for Brazilian exports to price their product.

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