GSX Weekly Commodity Comment

Summary

Table of Contents:

Macro & Markets Snapshot

Cotton – weather window closing
Coffee & Sugar – farmer withholding vs. genuine shortfall
Global Macro – Bessent's bond play and the vigilante risk, Yen intervention via EURJPY, Iran sanctions, AI earnings, humanoid robots
Chart of the Week – ICE No. 11 Sugar

Cotton

Price Action & DXY read-through
Scenario Pricing – balance sheet at 1.1m bales of cuts vs. flat September S&D
Technical Levels (Strategic & Tactical)
Positioning – funds crowding into longs
Balance Sheet & Certs
Crop Progress & Condition Report
Export Sales
Soil Moisture & Drought Monitor
Cotton On-Call
Outlook – Bull / Bear / Base Case

Coffee

Price Action – U/Z spread breaks records
Robusta – Kenya/Ethiopia export surge
Technical Levels (Strategic & Tactical)
Physical Pricing (Fine Cup, Good Cup, Grinders, Conilon)
Certified Stocks – Arabica's 57.5% drawdown
Positioning
Outlook – Bull / Bear / Base Case

Sugar

Price Action – the run from 14c to 18.30c
Weather – Monsoon, Thailand rainfall, ENSO/IOD
Positioning – funds swing from 14th to 77th percentile
UNICA Report – the delayed read, and a cadence change on the horizon
Charts – Price Levels & Structure

Cotton

No. 2 cotton appears to have sufficient fundamental support to hold near current levels, with CTZ6 settling at 88.31 c/lb on 25 August. National subsoil moisture rated short or very short increased to 69%, from 62% the previous week. The Texas Panhandle has little rainfall in the forecast, while temperatures are expected to remain near 40°C, keeping crop stress and abandonment risk alive

At current prices, CTZ6 appears to be discounting a national abandonment rate implied by our internal regression model (shown below), versus USDA's current estimate of ~21%. The resulting production loss and revised crop estimate are set out below, firstly our bullish case: