Coffee Steady on Mixed Signals

COFFEE

March Coffee reached its highest level in a week early Thursday but remained inside the consolidation of the past two months. Bloomberg reported that JM Smucker has reversed plans for a third price hike for coffee this fiscal year, choosing instead to absorb $75 million in tariff-related costs that it has accrued so far this year. This suggests that coffee demand may be more price-sensitive than some have argued, if a major company is eager to avoid issuing a price increase despite higher costs. Reuters reports that coffee trading in Vietnam remained subdued this week as the market awaited fresh beans from a harvest delayed by rain. World Weather Inc. said on Wednesday that Brazil’s weather is expected to be mostly good for coffee during the next ten days. Key areas will get rain, and temperatures will be “seasonable.” ICE certified arabica stocks increased by 2,834 bags on Wednesday to 415,280.

COCOA

March Cocoa extended its rally overnight to trade to its highest level since November 5. Reassessments of the 2025/26 crop continue, with Rabobank on Tuesday cutting its estimate for this season’s surplus by 24% to 250,000 metric tons, citing a reduction in output expectation and ongoing, long-term production issues in Ivory Coast and Ghana. World Weather Inc says those two nations will receive some unusually heavy rainfall for this time of year over the weekend and int early next week that will disrupt cocoa maturation and harvesting. A more normal rainfall pattern should resume middle to late of next week. The market may also be drawing support on an anticipated increase in spec trading activity when the New York contract gets added to the Bloomberg Commodity Index in January. Citigroup has estimated that this could draw as much as $2 billion of buying in the first days of the month, representing nearly 40% of open interest. ICE cocoa stocks fell 7,568 bags on Wednesday to 1.665 million, the lowest since March 13.

COTTON

March Cotton edged higher early Thursday but remained inside the range of the past two weeks. The market rallied into the close on Wednesday on the FOMC decision to lower interest rates by 0.25%, not that the desision it was a surprise. The March Dollar Index has fallen to its lowest level since late October, which is viewed as supportive to cotton as it makes US exports more attractively priced on the global market. The next installment in US export sales will be released this morning, and it will cover the week ending November 13. It will be difficult to repeat the strong performance of Monday’s report, which showed net cotton sales for the week ending November 6 at 292,146 bales for the 2025/26 (current) marketing year and 96,792 for 2026/27 for a total of 388,938. That was up from 89,450 the previous week and was the strongest since last January.  Our guess is that anything over 200,000 bales would be viewed as strongly bullish, with 150,000+ probably being viewed a supportive. China’s agriculture ministry has increased its 2025/26 cotton consumption forecast to 7.6 million metric tons from 7.4 million in a previous forecast, citing progress in China-US trade negotiations and improved market confidence.

SUGAR

March Sugar is approaching the 50-day moving average up near 15.05, with if penetrated could spark some aggressive short covering. Earlier this week, sugar analysts at Green Pool said cane farmers in Thailand were switching to cassava due to low sugar prices and the emergence of white leaf disease in some areas. The group lowered its expectations for Thailand’s 2025/26 (October to September) sugar output, though they still called for a  6% increase from last year. They also suggested that 2026/27 output could fall 7.5% to 9.9 million tons. The recent Commitments of Traders Report showed managed money traders were holding a net short position of 198,231 contracts as of November 4, their largest since November 5, 2019. As prices are not much changed from that date, the market could be vulnerable to a heavy short-covering as resistance levels are taken out. World Weather Inc. expects ample rain and moderate temperatures in Center-sough Brazil over the next week to ten days, which is good for next year’s cane crop but could also slow harvest for the remainder of the 2025/26 season.

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