Lower Production for USDA Report?

COTTON

With US crop conditions falling slightly from 55% good/excellent as of July 31 to 51% as of August 31, we could see a modest decline in US production in Friday’s USDA Crop Production and supply/demand (WASDE) reports. Keep in mind the five-year average for August 31 is 44% G/E. The slow pace of export sales may also encourage the USDA to lower its 2025/26 export forecast. An early guess would be for a decline of 600,000 bales to 14.0 million. Friday’s export sales report showed the US cotton sales for week ending August 28 totaled 244,971 bales, all for the 2025/26. This was up from 179,333 the previous week add the highest for the marketing year so far. Cumulative sales for 2025/26 have reached 3.657 million bales, down from 4.441 million at this time last year and below the five-year average of 5.969 million, still the lowest for this point in the season since 2015/16. Sales have reached 32% of the USDA forecast versus a five-year average of 48% for this point in the marketing year.

COFFEE

December Coffee traded back and forth overnight inside Friday’s range. The market found support last month on a drawdown in exchange stocks in the wake of the 50% tariffs place on Brazilian imports into the US, but the trade is apparently waiting to see if the tariffs will hold. A federal appeals court ruled that President Trump overstepped his authority on most of the tariffs he has put in place, which likely puts the next decision on the Supreme Court. Brazilian coffee producers have reportedly been reluctant to market their crop, and there are some ideas that if the tariffs are reversed, the market would fall as Brazilian growers start to sell. ICE certified stocks increased 2,334 bags on Friday to 692,766 after falling to their lowest level since May 2, 2024 on Wednesday. Stocks fell 17,430 bags last week. There were 6,578 bags that passed grading on Friday; all of them were located in New York and of Mexico origin. Vietnam’s National Statistics Office reported that the nation exported 85,000 metric tons of coffee in August, up 12.9% from the same period last year. Cumulative exports since January have reached 1.14 million tons, up 7.8% from 2024. Another supportive factor for coffee prices has been revisions lower in Brazilian production forecasts.

SUGAR

October Sugar was slightly higher overnight after approaching July’s 2 ½ year low on Friday. Ample supply seems to be the theme, with Brazil’s production recovering from a slow start and expectations for strong crops out of India and Thailand this year after the good monsoon rainfall this season.  Germany’s sugar industry association released its first harvest report of the season today, and it put refined sugar production from beets at 4.40 million metric tons, down from 4.63 million in 2024, a 4.9% decline. They cited lower beet plantings.

COCOA

December Cocoa was lower overnight as the market continued to drift on expectations for lower demand and a decent mid-crop in west Africa. However, dry conditions in Ivory Coast and Ghana could start to raise concerns about the crop. The region has been experiencing seasonable dry pattern (in the midst of their rainy season) that been more severe and has lasted longer than normal. World Weather Service reports that rain continues to stay north of the most important production areas in Ivory Coast and Ghana, which have seen well below normal rainfall in the past 30 days. Southern Ivory Coast and southern Ghana will only see limited rain over the next week. Bloomberg reported that Cargill has halted cocoa processing in Ivory Coast over bean quality. ICE exchange stocks fell 10,249 bags on Friday to 2.134 million, the lowest since May 15. Stocks fell 26,032 bags last week.

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