Dollar Strength Undermines US Export Prospects

COTTON

December Cotton was lower early Wednesday, following a two day bounce off hopes for some sort of trade deal with China and off a decline in US crop conditions this week. On the bearish side, US exports continue at a slow pace, and the large net long position held by the funds leaves the market vulnerable to heavy selling. The US dollar reaching its highest level since late July does not help the export outlook.

COFFEE

December Coffee probed lower early Wednesday, extending Tuesday’s decline and falling to its lowest level since June 30. Increasing exchange stocks and a good start to the 2027 crop in Brazil are pressuring the market. Growers for Brazil’s largest cooperative, Cooxupe, were 98.6% harvested as of September 1. World Weather Inc. said Brazil’s main growing areas are seeing rain this week, which is beneficial to the 2027 crop after recent rains induced flowering. Rain was below normal in much of southwestern Colombia and in a part of the far north Colombia and western Venezuela over the past 10 days. This is not critical, as these regions have seen some timely rainfall recently, but more rain would be appreciated.

COCOA

July Cocoa was lower early Wednesday but inside Tuesday’s action that took the market to its lowest level since July 2. Recent rainfall in West Africa Coast has eased concerns about El Nino disrupting production this season. World Weather Inc. expects a routine occurrence of showers and thunderstorms from Ivory Coast to Cameroon and Nigeria during the next ten days. The look for all areas to rain at one time or another, with some seeing far more than others. A close watch on southern Ivory Coast and southwestern Ghana is warranted since recent rain in those areas was erratic and light. Ghana Cocoa Board (Cocobod) has returned to positive equity after a government-backed debt restructuring and cost-cutting measures eased years of pressure on the regulator’s balance sheet.

SUGAR

March Sugar was higher early Wednesday after rejecting a move to a four-week low on Tuesday. The funds are loaded up on the long side of the market, but so far this has failed to elicit heavy selling. Lower output expected from key producers this year provides a bullish bias. El Nino is expected to peak in November and linger into February, which has implications for global output. European beet production is already down due to drought, and India’s output is expected to be lower due to their uneven monsoon. Brazil’s output is lower, as crushers focus more of their efforts on ethanol output. Thailand production is expected to be down due growers favoring cassava. El Nino looms as another threat, though so far rainfall patterns in that Thailand have been okay.

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