Cotton Australia Crop Forecast Lower than USDA

COTTON

May Cotton was higher overnight and was pushing up against technical resistance at the 9-day moving average. Industry group Cotton Australia said today that they expect Australia to harvest more than 4.8 million bales of cotton in 2024/25. This is below the record 5.6 million from 2021/21 but well above the average of the last 10 years. In their last WASDE report, USDA put Australia’s 2024/25 production at 5.4 million bales, so the lower number from Cotton Australia could be offering some support. Australia’s harvest has begun and should last into May. Last week, a survey by the National Cotton Council of America put US 2025/26 cotton plantings at 9.6 million acres, down from 11.18 million in 2024/25. The USDA Outlook Forum this week will provide a peak at where USDA sees plantings this year. Traders see low prices, high interest rates, and the tariff threats discouraging growers from planting cotton. Key growing areas in Texas and the Southwest are dry and will need rain ahead of planting season. Last week’s export sales report was the strongest since January 16, but cumulative sales are the lowest in nine years. Friday’s Commitments of Traders report showed managed money traders were net buyers of 3,095 contracts of cotton for the week ending February 18, reducing their net short to 57,386. The previous week’s net short was a record, so the market could is still be vulnerable to short covering if resistance levels are taken out.

COCOA

May Cocoa was slightly higher overnight but was in the lower part of Friday’s big range down. The market collapsed on Friday after falling below technical support at the 9-day moving average and then below the February 7 low. The rainy season appears to be developing in West Africa, which is easing concerns about the upcoming mid-crop after hot and dry conditions had developed in late 2024. World Weather Service indicated that rain and thunderstorms occurred over the weekend from portions of interior southern Ivory Coast through portions of southern Ghana to much of Nigeria, and more is expected through the week and into early next week. Day to day rainfall is expected to be light and occasionally moderate, and most areas could see some moisture. Ivory Coast cocoa arrivals totaled 19,000 metric tons for the week ending February 23. This was down from 27,000 the previous week and 35,000 a year ago. Cumulative arrivals since the marketing year began on October 1 have reached 1.368 million tons, up from 1.163 million at this point a year ago but below the five-year average of 1.489 million. ICE certified cocoa stocks increase by 16,487 bags on Friday to 1.420 million, their highest since December 13. Stocks increased 36,654 bags last week. Friday’s Commitments of Traders report showed managed money traders were net buyers of 231 contracts of cocoa for the week ending February 18, increasing their net long to 27,535. This is well below the record net long of 79,541 from September 2023, which illustrates the general lack of interest fund traders have towards the cocoa market.

COFFEE

May NY Coffee extended last week’s selloff overnight and fell to its lowest level since February 5. The market broke below the 9-day moving average on Thursday, setting off some technical selling, and it has not recovered from that move. Rabobank on Friday seemed to downplay the threat that the recent dry conditions have placed on the upcoming crop in Brazil, saying that there should be enough moisture to maintain the “reduced” cherry load, assuming rains return shortly. However, World Weather Service expects the lighter than usual rainfall to continue through the next seven to 10 days, which they warn will threaten the yield and quality of cherries. Weather in Vietnam, Indonesia and west central Africa has been good and looks to continue that way. ICE certified arabica stocks increased by 8,936 bags on Friday to 787,999. Stocks were down 51,400 last week. There are 113,331 pending review, the lowest since January 31. Friday’s Commitments of Traders report showed managed money traders were net sellers of 559 contracts of coffee for the week ending February 18, reducing their net long to 59,602. This is below the record net long of 71,811 from last April, which eases up on the overbought condition.

SUGAR

May Sugar is close to taking out Friday’s 2 ½ month high this morning. Since January, the market has rallied 3.14 cents (19%) off 22-month lows on lowered expectations for crops in India, Brazil and the US. Louisiana cane growing areas saw their second freeze event of the winter last week, which lowered expectations for the upcoming crop even further. Of the 9.37 million short tons of sugar the US was expected to produce in 2024/25, 2.02 million (22%) was expected to come from Louisiana. The US was expected to import 2.893 million tons this year, and substantial losses in the Louisiana crop could cause the US to allow more imports. Earlier this year India announced it would allow exports of 1 million metric tons, but recent reports have suggested that exports may top off at 700,000. Brazil has been dry in recent weeks, which has lowered expectations for the 2025/26 crop, which begins in April. The next bi-monthly UNICA report on Brazilian center-south production (for the first half of February) is due out this week. The last report showed cumulative 2024/25 production was running 5.5% below last year. Friday’s Commitments of Traders report showed managed money traders were net buyers of 34,230 contracts of sugar for the week ending February 18, reducing their net short to 10,940.

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