Today’s UNICA Report: Recovery Output?

SUGAR

UNICA will release its report on Brazilian Center South sugar cane crushing and sugar production for the first half of July this morning, and given the lack of other pressing news, the report could command traders’ attention today. Dry conditions in Brazil this month have the trade expecting a recovery in output from June. A survey of analysts conducted by S&P Global has sugar production at 3.3 million metric tons, up 12.5% from last year. This would put cumulative production for 2025/26 at 15.6 million tons, down 9.7% from a year ago. Sugarcane crushing is expected to come in at 48.3 million tons, up 11.3% from year-age. At the end of June, cumulative production was down 14.3% from a year ago. An Indian weather department official said yesterday that the nation is likely to get average monsoon rainfall in August and above-average rainfall in September after receiving 5% above-normal rains in July. World Weather Service says southern India could trend wetter next week, which should be beneficial after the dry conditions recently. Thailand could see more drying in its sugarcane areas for at least another week to 10 days.

Pattern of background of sugar cane varieties

COFFEE

September Coffee was higher overnight but held inside the recent trading range. Energy and orange juice have been exempted from the 50% tariffs on imports from Brazil, but so far coffee has not. The US gets roughly one third of its coffee from Brazil, so an imposition of the tariffs would cause a severe disruption to the global market. This could push prices higher in the near term, but high prices could also reduce consumption in the US. The US would be bidding higher for coffee produced elsewhere, while Brazil would be looking for buyers. The fact that the tariff threat is based on a pollical dispute, with Trump saying the purpose of the tariff is to fight what he has called a “witch hunt” against former President Jair Bolsonaro while the current Brazilian President remains steadfast, suggests it will difficult to reach an agreement. All coffee consumers can hope for is a carve-out for coffee. It was cold Wednesday morning in Brazil, but World Weather Service in most of the key coffee production areas were above the frost threshold and no damage resulted. They expect temperatures to be quick to moderate. Citi said yesterday that it a 6.1 million-bag global coffee surplus in 2025/26 amid improved production in Brazil, Vietnam and Indonesia.

COTTON

December Cotton is higher this morning after falling to its lowest level in a month yesterday. The market has been in a sideways pattern for months, as strong US crop conditions and a slow export pace limit advances but low prices limit downside risk. The trade does not seem to be looking for a particularly strong export sales report today. Last week’s report showed cancellations of 32,748 bales for the 2024/25 (current) marketing year and net sales of 132,624 for 2025/26 for a total of 99,876 (for the week ending July 17). Cumulative new crop sales had reached only 2.106 million bales, the lowest since 2014/15. The new marketing year begins August 1. President Trump announced a 25% tariff on goods imported from India starting August 1, along with an unspecified penalty for buying Russian weapons and oil. Indian government sources told Reuters that they remain engaged with the US on a trade deal. World Weather Service says Western Texas will be dry through most of the next two weeks with a timely round of rain Wednesday into Sunday that will slow drying rates while inducing some increases in soil moisture that should be supportive of cotton development for a while longer. The Blacklands, Coastal Bend, and South Texas will see a restricted rainfall pattern through most the next two weeks with exceptions Thursday into Monday when much of the Blacklands and the Coastal Bend could receive at least some rain. The soil is dry enough in most of the region that increases in crop stress may occur in many areas during the next two weeks. This may set Texas crop conditions, which are running well ahead of average, back a bit.

COCOA

September Cocoa was near unchanged and in the bottom portion of yesterday’s range. The market failed to take out the 50-day moving average on a rally attempt this week and is back inside the sideways pattern it has observed for a the past eight sessions. The trade is awaiting the arrival of the west African main crop, whose marketing year begins on October 1. West African weather this summer appears to be conducive to a good crop, with no consistent problems noted. Conditions have turned drier in Ivory Coast and Ghana cocoa regions over the past few weeks, but this is typical for this time of year. World Weather Service expects this pattern to continue for another few weeks before seasonal rains resume in mid to late August. Rain AND sunshine are ideal. Too much rain and not enough sunshine can cause disease. World Weather Service also warns that predictions of La Nina-like conditions evolving this autumn may be misconstrued and that caution is advised until the forecast becomes clearer.

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