Coffee Falls on Rising ICE Stocks

COFFEE

December Coffee extended its recent selloff early Thursday, trading to its lowest level since June 30. A jump in ICE exchange stocks on Wednesday was one more indicator that Brazilian supplies are arriving and helping east the tight situation that lifted the market to the vicinity of contract highs in late August. Cooxupe, Brazil’s largest coffee cooperative, said on Wednesday that its farmers had harvested 97.3% of their 2026 crop as of September 11, up from 95.4% a week earlier. This behind 98.9% at that point last year, but it does indicate that harvest is nearly complete. Recall that Brazil’s green coffee exports in the first two weeks of September were up 51.5% from the average for September 2025. Brazil flowering appears to be off to a strong start for their 2026/27 production. World Weather Inc. expects precipitation in key growing areas to become more sporadic and light over the next couple of days and then increase briefly Friday into Saturday before becoming erratic again for a while next week. The environment will be good for recently flowered crops, but greater rain will be needed in Bahia, northern areas to induce greater flowering.

COCOA

December Cocoa was lower early Thursday but still holding above last week’s low.  Less than ideal growing conditions in west Africa lend support, but the market is also concerned about a potential backup in  supply as the new marketing year begins. The possibility that El Nino will lower production this coming fall and winter looms over the market. the exporters’ association GEPEX said Ivory Coast August cocoa grind at 47,646 metric tons, up 21.3% from a year prior. This puts total grind from the start of the 2025/26 season in October at 601,172 metric tons up 8.4% from the same period in 2024/25. The Ghanian Chamber of Cocoa Marketers said cocoa buyers in Ghana are owed the equivalent of about $349 million by regulator COCOBOD for last season’s crop and want it paid before the new crop year begins. They also warned that financing may not yet be in place to fund purchases when the season opens. Back in June, Ghana and Ivory Coast agreed to harmonize their farmgate prices and season start dates. Ivory Coast officially began its season on September 1, but COCOBOD has yet to confirm when their new season will begin. World Weather Inc. says satellite imagery suggested scattered showers occurred in Ivory Coast and Ghana where resulting rain was light to locally moderate. They look for more rain in most cocoa production areas from Ivory Coast to Cameroon and Nigeria during the next week.  There will continue to be need for greater volumes of rain in Ivory Coast in particular.  Long term moisture deficits are unlikely to go away, but there will be at least some precipitation for crop development during the forecast period.

SUGAR

March Sugar was lower again early Thursday. The market has been hit with a lot of bullish news recently,  but it has been under pressure since reaching a contract high last week. A setback in oil yesterday and overnight undercuts support for sugar, as it lowers the incentive to crush cane for ethanol, but it is also possible that the bulls are worried about the large net long positions held by the funds. Last week’s Commitments of Traders report showed the managed money traders were net long at 247,051 contracts as of September 8, which was in the vicinity of record highs. There may have been some fund selling since that data was collected, but the selloff so far has not appeared large enough to account for much long liquidation. Bullish factors include lower beet production in Europe (France is expected to see its smallest sugar beet harvest since the 1970s), India reduced prospects from an uneven monsoon (the nation is importing up to 1 million tons of sugar after prices hit record levels), and lower production expected out of Thailand. Brazil sugar production has been hit by a greater focus on ethanol as well as too much rain during peak harvest time.

COTTON

December Cotton was resumed its downtrend early Thursday, falling to its lowest level since August 13. The market has fallen off sharply since putting in a contract high on August 31. The funds were loaded up on the long side, and a slight improvement in the weekly US crop conditions report after the close on the 31^st seemed to usher in the selling. The Fed raised rates on Wednesday as expected, pushing the dollar to its highest level since late July. This added to the pressure on cotton the stronger currency makes exports appear more expensive. Some in the trade may be hoping that the upcoming talks between President Trump and Chinese President Xi will result in an agreement for China to purchase US cotton, but most of the focus is in on a potential commitment for soybean purchases. US cotton export sales have been dismal recently, so a strong showing tin this morning’s report could spark a recovery bounce.

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