Cotton Needs More Rain

COTTON

July Cotton was near unchanged early Friday as it continued to assess its position after climbing 20 cents in two months. The rally has traders suspecting US planted area will be above the prospective plantings estimate from March. US cotton growing areas remain in drought, but enough rainfall has fallen over the past week to improve the crop’s chances.  NOAA reported widespread heavy rainfall and thunderstorms in the Deep South last week. Rainfall across central and western Texas eased drought across the upper Rio Grande Valley as well. However, they and World Weather Inc. point out the more rainfall is needed.

COCOA

July Cocoa was near unchanged early Friday and inside Thursday’s range that saw the market trade to its highest level since January 27. The market rallied $1,249/metric ton (+38%) in just six sessions on what appears to be short covering. The expected arrival of El Nino in June has traders turning cautious about the prospects for upcoming crops and perhaps has sent buyers looking for some insurance against future price highs. Some analysts are starting to lower their expectations of the 2026/27 crop year. However, World Weather Inc. says it may take until next year before adverse weather (which would include dry conditions in West Africa and Indonesia and overly wet conditions in Ecuador) affects production. A Reuters article pointed out that Ghana’s cocoa industry remains in disarray, with official buyers unable to pay growers for cocoa already delivered.

COFFEE

July Coffee was slightly higher early Friday after falling to its lowest level since February 27 on Thursday. With what is expected to be the strongest Brazilian arabica crop in 3-5 years and a record coffee crop overall staring it in the face, the coffee market is having a difficult time developing upward momentum. It has been in a sideways pattern for two months, with buyers coming in to support the market on breaks, but this time may be different with the harvest so close. The Brazilian government reported on Thursday that the nation exported 171,466 metric tons of green coffee in April, down from 173,080 for the same period last year. The Brazilian real has reached its highest level since March 2024, which does lower the incentive for growers to sell, but that only goes so far. Despite the rally this year, it is still historically low.

SUGAR

July Sugar was near unchanged early Friday and was trading near the bottom of this week’s range. The market sold off hard this week on the news of a potential peace agreement between the US and Iran, and it has remained under pressure despite the uncertainty of the status of that agreement. The market seemed to be counting on higher crude oil prices boosting Brazilian ethanol production from cane at the expense of sugar.   Two Indian government sources said on Wednesday that the nation has now no plans to curb sugar exports for now, despite lower output. Earlier this year, India lowered its forecast for 2025/26 production after untimely rains hit yields late in 2025. El Nino is expected to reduce monsoon rainfall this year, but the effects may be mitigated by conditions in the Arabian sea. The Brazilian government reported on Thursday that the nation exported 1.186 million metric tons of sugar in April, down from 1.551 million for the same period last year.

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