China Lowers Its Cotton Import Forecast

COTTON

July Cotton clearly benefited from yesterday’s postponement of the reciprocal tariffs, but it had already recovered impressively from the selloff that came in the wake of the initial announcement of the tariffs last week. China is not as big a buyer of US cotton as it used to be. Vietnam is the largest buyer, and they were facing one of the biggest tariffs in the initial announcement. China’s agriculture ministry cut its forecast for cotton imports in the 2024/25 crop year to 1.5 million metric tons, down from 1.7 million forecast last month. Their cotton consumption is forecast at 7.6 million tons, down from 7.8 million tons due to the impact of the US tariffs, which have slowed China’s textile and apparel exports. The export sales report this morning will be as of last Thursday, the day after the tariffs were announced. Last week’s report showed net sales 126,029 bales for the week ending March 20, which was the lowest since October, but shipments were strong. As of last week, Vietnam was the biggest buyer of US cotton for the 2024/25 marketing year at 2.334 million bales. They were followed by Pakistan at 2.208 million and Turkey at 1.504 million. China was the fourth largest at 707,000, followed by Mexico at 643,000 and Bangladesh at 545,000.

SUGAR

July Sugar was higher overnight in reaction to the postponement of the tariffs, as the market was already closed yesterday when the news hit. Yesterday, sugar fell to its lowest level since March 6 on concerns over the global economy in the wake of last week’s tariff announcements. A steep drop in crude oil and the Brazilian real didn’t help. The real did reverse higher yesterday, which reduces the incentive for Brazilian producers to sell, but while crude oil rallied off its lows yesterday, it is lower this morning. World Weather Service seems to be of the opinion that Brazil’s sugarcane crop is in favorable shape, despite less than usual rain in recent weeks. The new crop year officially begins this month, but harvest can start in March. There has been no announcement yet when the next UNICA update (covering the second half of March) will be released, but it could come tomorrow or early next week.

COCOA

July Cocoa is higher this morning after bouncing off the 200-day moving average yesterday. The market more or less ignored what was happening in the stock and bond markets yesterday, as it found strength early in the session ahead of the postponement in the US reciprocal tariffs. The rally did follow a steep selloff in the wake of last week’s tariff announcements, which had followed a quick rally off expectations for a poor Ivory Coast mid-crop. Ghana has kept the fixed farmgate price paid to cocoa farmers unchanged after Ivory Coast raised its 2024/25 state-guaranteed mid-crop price paid to cocoa farmers by 22% last week. Barry Callebaut said it is planning to increase US-based production to fend off the effects of the tariffs. ICE certified stocks increased 11,435 bags yesterday to 1.868 million, the highest since October 22. World Weather Service expects west-central Africa cocoa areas to see will periodic rainfall that will support crop development.

COFFEE

July Coffee extended yesterday’s reversal action overnight. Like cocoa, coffee closed too early yesterday to see the full benefit from the postponement of the tariffs, but it had already reversed after trading to its lowest level since January 22. Cecafe reported overnight that Brazilian green coffee exports totaled 2.95 million bags in March, down 26.5% from a year ago. Arabica exports totaled 2.81 million bags, down 11%, and robusta exports totaled 138,500, down 84%. Indonesia exported 29,852 metric tons of Sumatra robusta beans in February, up from 3,342 tons for the same period a year ago, according to data from local trade office. This was the largest monthly export total in at least a year. Dryness remains a concern in Brazilian growing areas, though some regions have experienced rain recently and some greater amounts could be seen into Saturday.  World Weather Service expects a somewhat wetter trend over the next several days with most coffee areas getting rain at one time or another by the end of next week, but amounts will continue to be lighter than desired after the prolonged period of below normal precipitation.

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