March Cotton Up Before Supply Update

COTTON

March Cotton was higher early Tuesday following a selloff yesterday that came despite a strong export sales report. Traders are apparently looking for a slight reduction in US exports, a slight increase in US production, and a modest increase in US ending stocks in the USDA supply/demand report later today. For the report, the Bloomberg survey has an average trade expectation for US 2025/26 cotton production at 14.16 million bales (range 13.85-14.40), versus 14.12 million bales in the November update and 14.41 for 2024/25. Exports are expected to come in at 12.09 million bales (range 11.70-12.30) versus 12.20 million in November, and ending stocks at 4.44 million (4.20-4.60) versus 4.30 million in November. This would put the stocks/use ratio at around 32% versus 30.9% estimated in November, 29.4% last year, and a five-year average of 26.4%. This would be close to highest the ratio has been since 2022/23, when it reached 32.1%. World 2025/26 production is expected around 120.94 million bales versus 120.08 million bales in November, and world ending stocks are expected at 76.14 million versus 75.93 million in November. This would put the world stocks/use ratio at around 64.3% versus 63.9% November, 62.6% last year, and a five-year average of 62.7%. And it would  be the highest since 2022/23.

COCOA

March Cocoa was sharply higher early Tuesday, rallying right up to the 50-day moving average. The last time it reached that line (in early November) the market failed to push through it, and this sparked a three week selloff to new lows for the move. News yesterday of a slowdown in Ivory Coast arrivals after the aggressive pace of the previous weeks may have traders questioning the whether this year’s crop is as strong as they suspected. Monday’s data showed arrivals totaling 85,000 metric tons for the week ending December 7, same as last year and in line with the five-year average. Cumulative arrivals since the marketing year began have reached 803,000 tons, down from 820,000 last year at this time and below the five year average for this date at 824,000. Ivory Coast farmers interviewed by Reuters said last week’s light rains and hot weather in most of Ivory Coast’s main cocoa regions will likely improve the size and the quality of beans to be harvested in February. They also said significant volumes of beans were currently leaving the bush as harvesting was picking up. They expect the volume of to be bigger than October and November as plenty of big pods were ripening on trees.

COFFEE

March Coffee was slightly higher early Tuesday but inside the range of Monday’s selloff. Reuters reports that dealers expect shipments from Brazil to the US to pick up in the coming weeks now that the tariffs have been lifted. The Brazilian real was sharply lower on Monday to its lowest level since October 14, which increases the incentive for Brazilian producers to sell for export. The real recovered slightly overnight, which may have lent support to coffee. World Weather Inc. say rains last week and this week in key growing areas of Brazil should benefit the 2025/26 coffee crop. ICE certified arabica stocks fell 51,44 bags on Monday to 421,379 their first decline in five sessions.

SUGAR

March Sugar edged lower on Monday but stayed inside the range of the past week. The market has seen a modest bounce off contract lows after falling 50% from its peak in late 2023. It is possible the market put in a solid low at 14.04 on November 6, but it may be too much to ask for a substantial rally unless the current large supply situation comes under threat. India and Thailand have seen strong production this year, but the expectation for the size of the global surplus moderated over the past month. India is expected to allow 1.5 million tons of exports, but their sales have been hindered by low world prices. Brazilian crushers are focusing more of their activity to ethanol production at the expense of sugar output. Bloomberg reported that Russian 2025/26 sugar production could reached 6.4-6.5 million metric tons, up from 6.37 million the previous year but down from 6.6 million estimated in October. According to World Weather Inc, Sao Paulo, and much of center south Brazil are very dry due to the lack of rain last week, but wet weather over the next two weeks will gradually bolster soil moisture.

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