Worst of the Export Worries Over?

COTTON

March Cotton is back approaching Monday’s two week high this morning. All the tariff talk may have had cotton traders worried about retribution, but there has been so much damage to US exports this year that there may be a feeling things could not get much worse. The US has already lost market share to Brazil due to a poor US crop last year and a strong dollar, allowing Brazil to surpassed US as the world’s largest exporter. (There were also reports this week that Brazilian farmers were switching to more cotton and less corn this year.) There may also be a push to get sales done before the tariffs go into effect and spark retaliation by China and other nations. Low prices earlier this month have appeared to encourage sales. Last week’s export sales report showed net sales of 318,516 bales for the 2024/25 for the week ending November 14, the largest so far for the marketing year. Adding new crop sales of 16,016 brought the total to 334,532, which was the largest since June. Cumulative sales for 2024/25 had totaled 6.792 million bales, the lowest since 2015/16. Sales to China have only reached 623,200 bales versus 2.903 million a year ago. This suggests that any retaliation to the tariffs on China’s part would have a limited effect on cotton exports. Pakistan has been the biggest buyer so far this year at 1.349 million bales, followed by Vietnam at 1.066 million. China has also had a strong crop, which reduces their import needs. A strong report on Friday could reinforce this new found optimism, but a disappointing one could set the market back on its heels.

COFFEE

March NY Coffee extended its rally overnight to new contract highs. January London Coffee pushed through its  contract high from September but backed off from that level. Concerns that this year’s drought in Brazil left trees without enough energy to produce a strong crop in 2025 despite recent rainfall has been the main driver of the rally this month. A statement from ING said that the flowers may not attach to the branches. Farmers are also said to be holding back sales in anticipation of higher prices. The trade is also awaiting the arrival of the Vietnam harvest. World Weather Service says net drying is expected in Brazil today, with the north continuing to dry down tomorrow. A mix of rain dry periods are expected into next the week, which should be favorable to crop development, but the conditions of the trees is the main question.

COCOA

March Cocoa is hovering around last week’s contract highs this morning. The market has rallied this month off concerns that the upcoming crops will not be strong enough to overcome three years of global supply deficits. A Reuters story yesterday speculated that last year’s poor crop left Ghana’s Cocobod with as much as 350,000 metric tons of deferred obligations that it has to fill with this year’s crop. The dry season appears to have arrived in West Africa, which is seasonal but nonetheless keeps production worries alive. At least it helps reduces the threat of disease from too much rains. World Weather Service expects only light rains along the coast through the next week, which could be good for harvesting. West Africa received very little rain over the last 24 hours.

SUGAR

UNICA says they will release their monthly report on Brazilian Center-South sugar production for the first half on November today. A survey of analysts done by S&P Global showed an average expectation for production at 979,000 metric tons, which would be down 55.5% from a year ago. This would put cumulative output for the 2024/25 marketing year down 2.8% from a year ago, which would be the first time behind last year all season. The market may need this type of result to confirm the low expectations for the 2024/25 crop. During the second half of October, production was 1.78 million tons, 24.3% below a year ago. Cumulative production since the marketing year began on April 1 had reached 37.4 million tons, up 0.3% from last year. Consultancy Datagro is forecasting Brazilian Center-South sugar production for 2025/26 at 42.0-43.2 million tons in 2025/26 versus 39.3 million in 2024/25. They project the cane crush will be 590-620 million tons versus 602 million in 2024/25. Other forecasts have been less optimistic after the heat and drought and fires earlier this year.

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