Brazil Tariffs Slash US Coffee Imports, Futures Hit Highs

COFFEE

December Coffee pushed through its April contract highs overnight, as there seem to be no end in sight for the 50% tariff on Brazilian imports. Last week it was reported that Brazil’s coffee exports to the US fell 46% below year ago levels in August. ICE certified stocks continue to decline, falling 766 bags on Friday to 669,225 the lowest since May 1, 2024. Stocks fell 23,541 bags last week. News that former Brazilian President Bolsonaro was sentenced to 27 years in prison may have convinced traders that there will be no resolution to the tariff impasse. The US Supreme Court is not expected to hear the case over whether the tariffs are legal until November, and it’s possible that a decision would not be reached until early next year. World Weather Inc. says Brazil should stay warm and mostly dry of another week, with some potential for showers and thunderstorms mid to late next week. At some point the region will need rain to induce flowering for the 2026 crop.

SUGAR

There has been no indication that UNICA will release its Brazilian Sugar production report for the second half of August today. A survey conducted by S&P Global last week called for production to come in at 3.8 million metric tons, which would be up 17.3% from a year ago. First-half August production was 3.615 million tons, up 16.0% from the same period last year. The survey also has sugarcane crushing at 49.5 million tons, up 9.5% and total recoverable sugars per kilogram at 149.48 kilograms per ton of cane, which would be down 4.1%. Ethanol output (including corn ethanol) was forecast at 2.4 billion liters, down 2.5%. As of August 16, cumulative sugar production for 2025/26 was down 4.7% from 2024 versus being down 9.2% on July 16 and down 14.7% on June 16. If the second-half August number comes in at expectations, it would put cumulative production down 2.2% from a year ago. Last week, Indonesia halted the issuance of raw sugar import permits for the rest of the year after sugarcane farmers complained about the difficulties of competing with imports. Indonesia has issued permits to import 4.19 million metric tons out of a total quota of 4.39 million.

COTTON

December Cotton is lower this morning but inside yesterday’s range. The USDA Supply/Demand report had US 2025/26 production and ending stocks coming in below expectations, but they were also left unchanged from the previous month, which was hardly a bullish outcome. World ending stocks came in below expectations and down from the previous month, but that was thanks in part to an increase in 2024/25 demand that lowered ending stocks for 2024/25. They did raise global cotton consumption by 850,000 bales, driven by a 1-million bale increase for China and a 100,000-bale increase for Vietnam but partially offset by a 200,000-bale decrease for Turkey and minor adjustments in other countries. World Weather Inc said west Texas precipitation was greater than expected over the weekend and that the moisture will good for future crop development, but dry and warm weather is needed most to expedite late season cotton development. The US drought monitor showed 32% of US cotton production was in an area experiencing drought as of September 9, up from 30% the previous week, due to worsening conditions in the Delta. This may be a drag on crop conditions this week, but they have been running very strong.

COCOA

December Cocoa was slightly higher despite indications that West Africa is finally getting the rain it has missed for the past several weeks. ICE stocks continue to decline, and the trade is awaiting the arrival of the main crop, which should be starting soon. The new marketing year begins October 1. World Weather Inc said central and southern Ghana saw some much needed and welcome rain last week over the weekend. Ivory Coast rainfall was still restricted, but the forecast continues to suggest improving rainfall in the next couple of weeks. Rain was also noted in portions of Nigeria and Cameroon during the weekend with most of it light to moderate in intensity. There were some complaints of Black Pod disease from Ivory Coast farmers last week, and it will be interesting to see if they continue this week. Overcast, cool weather was blamed. ICE exchange stocks fell 6,807 bags on Friday to 2.093 million, the lowest since May 5. Stocks fell 41,546 bags last week and they have declined for eight straight sessions.

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