Brazil Harvest Underway

COFFEE

July Coffee is back testing support around the 100-day moving average this morning, for the fifth time in seven sessions. Harvest is underway in Brazil, and the increased supply may be putting pressure on London Robusta prices as well as the NY arabica contract. July London Coffee was back below the 200-day moving average overnight, and if that market sells off on this negative technical signal, that could spark a selloff in NY prices as well. Mostly dry conditions in Brazil coffee growing areas should help advance the harvest pace. However, the stronger Brazilian real could lower the incentive for growers to sell for export. The USDA’s initial assessments call for larger crops in Brazil, Vietnam, and Indonesia in 2025/26, primarily due to higher robusta production. Arabica crops in Brazil and Colombia are expected to decline, but forecasts for Brazil have improved since earlier this year. ICE certified exchange stocks increased by 9,068 bags yesterday to 876,019, the highest since January 30.

COCOA

Rains this week in West Africa have improved the outlook for the cocoa crop, even if the benefits will not show up right away. This marks a change from lower than normal rainfall earlier this month that reignited concerns about the mid-crop. The rally into Tuesday’s high may have also been driven by lower Ivory Coast port arrivals last week and reports of poor bean quality. The market also became short term overbought, and the market’s failure to push close above the January high, much less test the contract high from December, was disappointing for the bulls. World Weather Service expects more showers and thunderstorms in West Africa during the next week that will affect all crop areas at one time or another. ICE exchange stocks increased 10,047 bags yesterday 2.165 million, their highest since September 24.

COTTON

US cotton plantings are slightly behind the average pace, and the USDA’s initial forecasts for 2025/26 show a slight reduction in the US stocks/use ratio but still above the 5- and 10-year averages, which was not enough to spark concerns about tight supply. Furthermore, the USDA setup is based on stronger exports next season, which may be questionable given uncertainty over the global economy and tariffs. The market may be looking to this morning’s export sales report for direction. Last week’s report 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 for the week ending May 8. Cumulative sales for 2024/25 had reached 11.155 million bales, down from 11.802 million at the same time last year and the lowest since 2015/16. New crop sales had reached 1.276 million bales, for the slowest start since 2015/16. A bit of a dry-off in the Delta this week could allow for plantings to try to catch before more rains arrive in the first half of next week. Dry conditions in Texas may also allow for plantings to advance there, and they could see some badly needed rain in the first half of next week.

SUGAR

The recent dry conditions in Center-South Brazil should be conducive to the cane harvest after a slow start in April. Recent forecasts have called for a modest global surplus in 2025/26 after a significant deficit last year. India, Thailand and Brazil are all expected to see higher production. The trade will be watching Brazil’s progress in the twice-monthly UNICA reports, and we expect an improvement the report for the first half of May, which should come out late next week. In India, the annual monsoon rains are expected to first hit landfall on May 28, about a week earlier than normal, and this should support a stronger cane crop there. Crude oil prices are under pressure this morning on reports that OPEC+ plans another sharp increase in production, and this could add to pressure on sugar prices today.

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