Coffee Faces Selling Pressure

COFFEE

December Coffee was near unchanged early Thursday and was close to taking out a two-week low. The market is still feeling pressure from the collapse in the Brazilian real this week, as that would seem to open the door for aggressive selling by Brazilian exporters and producers who may have been holding back. ICE certified arabica stocks fell another 2,787 bags on Wednesday to 222,035, their lowest since September 15. However, the amount pending review increased by 5,860 bags to 41,961, and they are all from Brazil. The amount pending has reached its highest level since September 16. World Weather Inc said rain in Bahia and northeastern Minas Gerais this week temporarily increased soil moisture in unirrigated production areas but that the region will slip back into a net drying mode later this week and into next week. Further south, northern Parana, Cerrado Mineiro and Zona da Mata including Sul de Minas will see more rains. Indonesia is getting a relief from El Nino inspired dryness, and regular rounds of rain are expected during the next week. So far, Indonesia has been the most affected by El Nino. Harvest is getting underway in Viet Nam, which may be adding pressure to robusta prices.

SUGAR

March Sugar was higher early Thursday in the wake of more evidence of low output in Brazil. The collapse in the real early this week may open the door for more Brazilian exports, but it did not fix the problem of too little supply. Brazil’s output is sharply lower this year due to too much rain, and the latest data from the Brazilian Agriculture Ministry, which was released on Wednesday, put Brazil center-south sugar production for the first half of October at 1.87 million metric tons, -27.1% from the same period last year. Cane crushing was -21.3% at 27.3 million tons, and ethanol production was -26.1% at 1.53 billion liters. This is more evidence of the slowdown in Brazilian sugar output due to too much rain. Based on previous data from the Ag Ministry and UNICA, this puts cumulative sugar production -14.4% from last year and the lowest since 2022. The poor output in October has been expected due to the reports of ample rain in the center-south region.

COCOA

December Cocoa was higher early Thursday but inside Wednesday’s range down action. The outlook for global cocoa supply is mixed, with weather not consistently bad but not consistently great either. There are concerns that El Nino will usher in some extreme conditions, and that situation will need to be watched, but so far the worst expectations have not been met. World Weather Inc. pointed out that top producers Ivory Coast and Ghana have received some rains recently that have helped alleviate previous dry spells that should allow for favorable pod development. Another major producer, Ecuador has seen too much rain, raising the possibility of wet weather diseases and revisions lower in their crop estimates. Indonesia has been too dry but is expected to see better rain over the next two weeks. Nigeria and Cameroon have seen ample rains and could benefit from a dry spell. ICE cocoa stocks increased by 5,236 bags on Wednesday to 3.685 million, reaching their highest level since May 27, 2024.

COTTON

December Cotton may be finding some cash buying support now that it has fallen back near the October 1 low, with anecdotal reports of mill buying. There could be some slowing in the harvest pace over the next week or so due to untimely rains in West Texas  the Delta and the southeast. The rains will be help rebuild soil moisture, which will be beneficial over the long run. The collapse in the Brazilian real this week opens the door for more competition with Brazil for export business, and the firmer dollar this week does not help. The US export sales report today was bullish, with net cotton sales for the week ending October 22 at 216,488 bales for the 2026/27 (current) marketing year and 38,345 for 2027/28 for a total of 254,833. This was up from 199,630 the previous week and the strongest in five weeks. Cumulative sales for 2026/27 have reached 5.665 million bales, up from 4.879 million at this time last year and below the five-year average of 6.648 million. Sales have reached 49% of the USDA forecast versus a five-year average of 57% for this point in the marketing year. Shipments totaled 160,762 bales, down from 196,366 the previous week. The biggest buyer this week was China at 57,403 bales (current and new crop combined), followed by Indonesia at 43,373, Turkey at 40,762, and Vietnam at 39,373.

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