Weekly gains across soft commodities on weather and policy-induced risks

Orange juice: fragile baseline meets storm risk

Orange juice futures climbed more than 9%, supporting an ongoing attempt to create a bottom near 200 cents per pound, a far cry from the 550 cents it reached last December, after traders priced in an above-normal Atlantic hurricane season, coinciding with historically weak U.S. citrus production. Florida’s 2024/25 orange crop is projected at its lowest level in more than a century, leaving little room to absorb weather-related disruptions. Brazil, the key foreign supplier to the U.S., has become even more critical, and recent policy developments have added uncertainty. While bulk juice imports were spared, new U.S. tariffs of 50% on certain Brazilian orange juice by-products—used in reconstituted blends—have complicated supply chains, raising costs and delivery risks. This mix of meteorological and political factors kept buyers willing to pay a premium for secure supply.

Coffee: frost chatter, low stocks, and tariff delays

Arabica coffee futures, which recently slumped to an eight-month low at 277 cents per pound rose over 7% to 322 cents supported by early-week reports of light frost in parts of southern Minas Gerais and Cerrado Mineiro. While damage was minimal, the scare was amplified by low certified ICE exchange stocks, currently at 736,000 bags—below last year’s levels and roughly one-third under the five-year seasonal average—limiting the cushion against potential production hiccups. In addition, recently imposed U.S. tariffs on Brazilian imports have delayed shipments and clouded short-term U.S. supply prospects. Weather concerns, thin stocks, and trade friction combined to create a squeeze in nearby prices.

Sugar: Brazil crush wobbles trigger short-covering

Sugar prices gained more than 5% on the week, with ICE October futures trading near 16.65 cents per pound after rebounding from a four-year low at the month’s start. Support came from Brazil’s center-south production data showing a 9% year-on-year drop through mid-July. The weaker-than-expected crush challenged the surplus narrative and caught a market where speculative short positions had recently reached a 2019 high of 111,000 contracts, equivalent to 5.6 million metric tons. The resulting short-covering sparked the week’s sharp move. India’s export restrictions remain for now, though expectations for possible easing in the 2025/26 season have yet to dampen the immediate bullish impact of Brazil’s softer output.

Cotton: USDA trims output and stocks

Cotton posted more modest gains after the August World Agriculture Supply and Demand Estimates Report (WASDE) cut U.S. production to 13.2 million bales and lowered ending stocks to 3.6 million bales. The reductions stemmed mainly from higher abandonment rates in the Southwest, despite a rise in the national yield projection. Globally, both output and stocks were revised down, tightening the market balance and lending support to prices. Reports from West Texas point to ongoing weather risk into harvest, keeping a weather premium in the market.

Cocoa: deficit narrative simmers in the background

Cocoa prices lagged the leaders but held firm on supply concerns. Port arrivals in Ivory Coast are trailing last year’s pace, and traders remain cautious about the next main crop after a season of disease and adverse weather. While recent grind data confirmed some demand rationing, the multi-year deficit narrative remains intact. The country’s Coffee and Cocoa Council recently reduced export contract sales for the main crop from October to March to 1.2 million tons, down from 1.3 million tons.

What happens next?

This week’s rally in softs underscores how quickly risk premia can return when tight supply baselines meet fresh catalysts, and in some cases an elevated speculative short position. For orange juice, the peak hurricane period will remain a critical driver into September. Coffee markets will track frost risk, certified stock changes, and U.S.-Brazil trade flow clarity. Sugar’s trajectory will hinge on upcoming Brazilian crush data and any shifts in Indian export policy, while cotton will remain sensitive to U.S. weather developments and USDA estimates.

In all cases, the near-term direction will be driven less by demand changes and more by the interplay of weather risks, policy actions, and the thin supply cushions that make the softs sector prone to sharp, sentiment-driven moves.

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