July Cotton Higher

COTTON

July Cotton is higher this morning as the market awaits the export sales report to see what affects the tariffs have had on US cotton sales and shipments. These numbers will be as of last Thursday, which means the postponement of the tariffs, which happened last Wednesday, will be barley reflected in today’s numbers. Crude oil was higher overnight after the US announced new sanctions against a Chinese oil refiner accused of facilitating the transport of Iranian crude oil, and this could be providing some support to cotton. Last week’s export sales report showed net sales 133,966 bales (current and new crops combined) for the week ending April 3. This was down from the previous week and the second lowest since October. Cumulative sales had reached 103% of the USDA forecast, which was in line with the five-year average for this point in the marketing year. Vietnam had the most commitments for the 2024/25 marketing year at 2.339 million bales, followed by Pakistan at 2.208 million, Turkey at 1.523 million, and China at 706,000. Overnight Bloomberg reported that Pakistan may commit to buying more US cotton and soybeans in order to negotiate a lower tariff. Vietnam and other importers of US cotton have expressed similar intentions recently. World Weather Service said West Texas is expected to see a bit of rain this weekend, with more expected later next week and possibly into the following weekend. They could use it. The southeast states will lean dry for the coming week, raising the need for timely rain, but fieldwork should advance favorably. Excessive rain in the Delta recently saturated field conditions and delayed fieldwork. Some river flooding will prevail through the next week to ten days.

COFFEE

July Coffee prices have turned lower this morning after hitting resistance at the 50-day moving average. The market saw a relief rally this week in the wake of the postponement of the punitive US tariffs against southeast Asian nations that provide most of the world’s robusta coffee. The tariff announcement earlier this month led to a technical breakdown on the charts that suggests that the NY arabica market put in a major top when it reached all-time highs in February. One major factor supporting prices had been low expectations for this year’s crop in Brazil, but earlier this week the Brazilian consultancy Safras & Mercado revised its forecast for Brazil’s 2025/26 coffee crops higher, with the arabica crop at around 40 million bags from the 38.35 million they forecast in December and robusta at 25-26 million bags versus 24.1 million in December. They credited good weather in February and early March. Brazil is seeing some welcome rain this week, if on the light side. World Weather Service predicted an active pattern over the next few days ending Sunday. After that, precipitation is likely to be more sporadic and light. ICE certified stocks fell 3,024 bags yesterday to 787,313.

COCOA

Cocoa prices are higher this morning in the wake of better than expected grind data from Europe and Asia overnight. Europe’s first-quarter cocoa grind came in at 353,522 metric tons, down 3.75% from a year ago. Asia’s grind was 213,898 tons, -3.45%. Going into the reports, traders had been looking for a declines of 5%-7%. Germany’s first-quarter grind came in at 97,418 tons, down 8.0%. The North American grind is due out later today. In the coming weeks, traders will be watching the pace of Ivory Coast cocoa arrivals to get a read on how their mid-crop is faring. Expectations are down because of the drier than normal dry season in West Africa this winter and what appears to be a slow start to their rainy season. World Weather Service expects isolated to scattered showers and thunderstorms to occur daily through the next week.  Nearly all areas from Ivory Coast to southeastern Nigeria and Cameroon will receive multiple rounds of light to locally moderate and welcome rain during the period. However, the daily distribution of significant rain will be erratic at times and some areas are likely to dry down. ICE certified stocks increased 1,016 bags yesterday to 1,883,819 their highest since October 21. Stocks have increased in eight out of the last nine sessions.

SUGAR

July Sugar is higher this morning after reversing from its lowest level since February 3 yesterday. The market gapped higher overnight but ran into resistance at the 9-day moving average. It received some bearish news this week with the Brazil UNICA update that showed better than expected Center South sugar production for the second half of March and which showed production running above year-ago levels for the first time since October. The new season is just getting underway. The market has already seen a 2.36-cent decline from its March high (-12%), putting it in a short term oversold posture. Sugar may also be drawing some support for higher crude oil prices overnight.

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