UNICA Report Approaches

SUGAR

UNICA usually releases its mid-month report by the 15^th of the month, which is tomorrow. This report will cover Brazilian center-south production for the second half of July. The last report showed first-half July production was up 15% from a year ago and that cumulative production was down 9.2% The dry conditions in Brazil were supportive to cane harvest and production in the first half of July, and those conditions extended into the second half of the month as well. Production usually peaks for the year in the second half of July, so the trade may be looking for a strong number in this report. First-half July production was 3.406 million metric tons, up from 2.906 million last year. Last year’s second-half July production was 3.643 million tons. Sugar’s share of cane crush was 53.68% in the first half of July versus 49.89% a year ago. European traders told Reuters that Trading Corporation of Pakistan (TCP) has issued a new international tender to buy 200,000 tons of white refined sugar. There are report that TCP purchased about 55,000 tons in a previous tender seeking up to 100,000, which closed this week. Open interest has been steadily climbing since the market put it its low in July, which suggests that buyers became interested. Brazilian sugarcane processor Raizen reported a net loss of 1.8 billion reais ($333.8 million) for the first quarter of the 2025/26 crop year versus a profit of 1.1 billion reais in the same period a year earlier.

The increase in open interest since the market put in its July low is positive, but the trade may be cautious in anticipation of the UNICA report.

COTTON

December Cotton has given back about 60% of its gains off Monday’s USDA report and about 38% of its gains off the  August 8 low. The USDA report did put the US stocks/use ratio for 2025/26 at 26.3%, which is just below the five-year average of 26.4%. Perhaps this is enough to justify more significant move off five-year lows. The world stocks/use ratio was 62.6% versus 65.5% in July and a five-year average of 62.9%. The export sales data in today’s report will cover the first week of the 2025/26 marketing year. The year will begin with 2.9 million bales of carryover sales from 2024/25, which is the lowest since 2015/16. It is possible that the tighter supply/demand data this week will encourage some new export sales, but those would not show up until next week’s report. The US crop is in strong shape, but World Weather Service warns that unirrigated southwestern West Texas cotton areas still need rain to support “the best” dryland production. Some rain is expected in West Texas next week and temperatures will be seasonable, but there is still doubt that a good soaking of rain will reach the southwestern dryland areas. This week’s crop progress report showed 44% of Texas’ crop was rated good/excellent as of Sunday, down from a peak of 52% on July 20 but still the highest since 2021 and above the five-year average of 30%. The dollar has weakened on expectations of a US Fed interest rate cut in the wake of the disappointing jobs data this month, which also help US export prospects. The tighter US and global supply may spark interest in US cotton exports, and the weaker dollar also helps.

COFFEE

December Coffee has been consolidating its gains from Monday, which came on news of limited frost damage in Brazil over the weekend. The word “limited” should be stressed, as it appears that the main growing areas avoided damage. As of yesterday, World Weather Service saw no risk of crop-damaging cold. Another factor supporting the market has been the consistent decline in ICE certified stocks, which fell 1,115 bags yesterday to 736,411, their lowest since May 14, 2024. However, certified stocks in US warehouses have increased from 57,535 bags on Monday to 62,675 bags yesterday. There have been 11,100 bags that have passed grading in NY in the past two sessions. Most of the influx appears to have come from Mexico and Central America. Cooxupe, Brazil’s largest coffee co-operative, said yesterday that its farmers had harvested 80.4% of their 2025 crop as of August 8, up from 74.2% the previous week but below the 87.3% reported for the same time last year. This year’s crop is expected to be down from last year due to the fact that it is in an off year for arabica production but also due to last year’s extended drought. In May and June, various forecasts for the 2025/26 arabica crop were running 6% to 14% below year ago. Cecafe said this week that buyers in the US have started requesting to postpone imports of Brazilian coffee due to the 50% tariff. They described the US coffee industry being in a “holding pattern” as it awaits news on tariff negotiations. The tariffs affect US supply but not global supply. Brazil’s President said yesterday that they are not announcing reciprocity measures and that they want to avoid worsening relations with the US, but he also stated that their sovereignty is untouchable.

COCOA

December Cocoa eased overnight to the bottom of the week’s range and about half-way back from Monday’s breakout rally high. ICE exchange stocks fell another 5,238 bags yesterday to 2.244 million, the lowest since June 6. Stocks have declined in 12 out of the last 13 sessions, and the tightening supply situation has drawn the attention of the bulls. However, the amount pending grading jumped 100,341 bags yesterday to 131,368, which is the highest since April 4. This week, Ivory Coast’s CCC lowered its contract sales for 2025/26 to 1.2 million metric tons from a previous sales of 1.3 million on poor weather conditions. This was not a big surprise, as there already had been a reduction in expectations following reports of low pod counts last week. World Weather Service says seasonal rains will slowly return to parts of Ivory Coast and Ghana after shifting far to the north in recent weeks. The weather has not been setting off alarms, but there have been occasional concerns about dryness and a lack of heat. Ivory Coast port arrivals for 2024/25 are the lowest they have been in at least six years. The new season starts in October.

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