Cotton Rallies on Rain Shortfall

COTTON

July Cotton was sharply higher early Thursday, trading to new contract highs. The US weekly Drought Monitor showed no improvement last week, with approximately 98% of US cotton production still experiencing drought as of April 28. A year ago about 21% was in drought. The US cotton belt is expected to see some relief over the next few days, but more is needed. World Weather Inc. said west Texas saw some rain overnight, and more is expected into Saturday morning, which will improve conditions somewhat, but follow up rain will be needed. South Texas and northeastern Mexico need much more rain to support unirrigated cotton development, and those areas will not see much significant rain for a while. The Delta received some welcome rain recently and more is coming Friday/Saturday. The southeastern US will continue in drought over the next ten days, despite some showers and thunderstorms that will offer temporary relief Friday into Saturday.

SUGAR

July Sugar was higher early Thursday and was back approaching Thursday’s high for the week. UNICA released its crush and sugar production for the 1^st half of April on Thursday for Brazil’s key center-south production region. Sugar production at 647,000 metric tons for the period was above an average expectation from an S&P Global survey calling for 541,000. Cane crush was higher than expected, and so was ethanol output. Sugar’s share of crush was 32.9% during the first half of April versus 44.7% for the same period last year, so the expectations for a greater emphasis on ethanol production held. The possibility that  high energy prices would support ethanol production and limit crushing for sugar has been a supportive factor for the market. The USDA attaché in India is projecting that nation’s 2026/27 sugar production at 33.6 million metric tons raw value basis, up from 30 million in 2025/26 and 28 million in 2024/25. The 2025/26 estimate was revised down from 35.25 million previously due to damaged caused by heavy rains in Maharashtra and other areas last August-November. The decline for 2025/26 was not a surprise. Two consecutive years of favorable monsoons have restored groundwater levels and surface water availability in major producing regions. For the first time in two years, domestic production is expected it exceed consumption. The upcoming El Nino event could affect this year’s monsoon rainfall, and the India Meteorological Department has already forecast the monsoon to be below normal this year. This could affect Indian production next year.

COCOA

July Cocoa was near unchanged early Friday following Thursday’s rally to its highest level since putting in a high at 3700 on April 15th. The market has been in an consolidation pattern for two months but it may have also been building a base for a recovery rally off the contract lows from February. Hershey beat first-quarter earnings estimates, helped by strong demand for its healthier snack brands but not chocolate. Volumes for the North America confectionery segment fell 4%, following a 5% decline in the fourth quarter of 2025. Ghana’s cocoa regulator has accused some officials at licensed buying companies of using government funds to buy cheap beans smuggled from the Ivory Coast, depriving local growers of income. A liquidity crisis Ghana’s cocoa sector has left farmers unpaid for beans delivered since November 2025, which makes it difficult for them to purchase inputs for upcoming crops. This has been compounded by the closure of the Strait of Hormuz, which has also driven up fertilizer costs. World Weather Inc. says the developing El Nino event should start to hinder global cocoa production later this year or next. In the meantime, favorable weather over the past several months have boosted production.

COFFEE

July Coffee was lower early Friday, extending its selloff from Thursday, as the market appears to be anticipating a strong harvest for Brazil. Earlier this week, the Coffee Trading Academy raised its forecast for Brazil’s 2026/27 coffee crop 71.4 million bags, a new record and an increase of 11.5% from 2025/26. The arabica crop was forecast at 47.9 million bags, up 13.5% from last year. These estimates are based on a survey of farmers, who credited strong off-season rainfall for the increase in expectations. The Brazilian harvest is expected to begin in earnest in mid-May.

Interested in more futures markets?  Explore our Market Dashboards here.