Dry Conditions to Help Brazil Harvest Progress

SUGAR

July Sugar is higher this morning after falling to its lowest level since May yesterday. Dry conditions in Center-South Brazil should help advance the harvest there. The UNICA report last week showed production was down sharply from year ago levels during the second half of July, which may have been due to too much rain during that period. Recent forecasts from various analysts called for a modest global surplus in 2025/26 after a deficit of 4-5 million in 2024/25, with expectations for Brazil’s production to be up 4-5%, India’s up 22-24%, and Thailand’s up 11-14%. The Indian government last week called for an arrival date of May 28 for the annual monsoon, about a week earlier than normal, which should help the cane crop. Traders will be watching the UNICA reports on the Brazilian harvest and monsoon progress in India closely.

COCOA

July Cocoa traded to its highest level since December 18 yesterday (which was the day the market peaked) but closed slightly lower on the day. The market has been supported by a slowdown in Ivory Coast port arrivals and reports of small and poor quality beans. This appears to be the result of the dry conditions this winter. Recent weather has turned more favorable, which sets the crop up for stronger production later this season. The overnight map showed widespread rain across Ivory Coast and Ghana over the past 24 hours. World Weather Service expects periodic rain and thunderstorms across West Africa, from Ivory Coast to Cameroon and Nigeria during the next week, which should maintain a favorable environment for tree, cherry, and pod development.

COTTON

The 2025/26 US cotton crop is not starting out in ideal conditions, but so far traders have not felt the need to build a weather premium, as the demand outlook remains poor. World Weather Service reports that most of West and South Texas are still rated quite dry, and little is expected over the next week or so. The overnight maps showed no rain over the last 18 hours. US cotton plantings are about two days behind the average pace, which is not very much but may be enough to prevent a test of the contract lows until the season moves further along. Last week’s USDA export sales report, for the week ending May 8, showed net sales of 122,192 bales for the 2024/25 (current) marketing year and 34,232 for 2025/26 for a total of 156,424. Cumulative sales for 2024/25 have reached 11.155 million bales, down from 11.802 million at this time last year and the lowest since 2015/16. Traders are also commenting the slow pace of new crop sales, which had reached 1.276 million bales as of May 8, the slowest start since 20215/16 as well. One supportive factor may be that prices are already hovering around five-year lows.

COFFEE

There was talk yesterday that Brazilian growers are not anxious to sell their arabica crop. The Brazilian real is hovering around its highest level in eight months, which reduces pressure on them to sell for export. The USDA Foreign Ag Service released its first assessments of 2025/26 production for Brazil, Vietnam, and Indonesia yesterday, and all three showed increases in robusta production. Brazil’s arabica crop is expected to be lower, but that is not a surprise given that this is an off year in the biennial cycle. Brazil’s total coffee production for 2025/26 was forecast at 65.0 million bags, up from 64.7 million in 2024/25, with arabica production at 40.9 million bags, down from 43.7 million in 2024/25, and robusta production at 24.1 million, up from 21.1 million in 2024/25. Vietnam’s 2025/26 production is forecast at 30.0 million bags for robusta and another 1.0 million for arabica, up from 28.0 million and 1.0 million, respectively, in 2024/25. Indonesia is expected to produce 9.8 million bags of robusta and 1.5 million arabica in 2025/26 for a total of 11.5 million. This is up from 9.3 million robusta and 1.4 million arabica in 2024/25 (total 10.7 million). On Monday, USDA FAS put Colombia’s 2025/26 arabica output at  12.5 million bags versus 13.2 million for 2024/25, which itself was revised higher from a previous estimate of 12.9 million. The overnight maps showed no rain in Brazilian growing areas, and World Weather Service does not expect much in the next week to ten days. This could help advance the harvest.

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