Commodity Futures Outlook: Cotton, Cocoa, Grains and Energy Face a Volatile Week Ahead

Cotton has been one of the more notable agricultural markets, while cocoa, wheat and soybeans have also made sizable moves. Coffee has moved in the opposite direction after a sharp retreat, and crude oil remains sensitive to every development involving Iran and the Strait of Hormuz.

The week beginning Monday, August 31, could be particularly active because traders will receive new U.S. crop-condition reports, export data, energy inventories and, on Friday, the August employment report. Federal Reserve expectations are also becoming increasingly important across commodities because changes in interest-rate expectations can move the U.S. dollar and influence the price of nearly everything traded internationally.

Cotton Futures Hold Near Recent Highs

Cotton will be one of the agricultural futures contracts worth watching closely.

December ICE Cotton No. 2 futures finished Friday at about 91.38 cents per pound after reaching 92.75 cents during the previous session. Although cotton fell approximately 1.1% Friday as traders took profits, December futures still gained roughly three cents per pound over the course of the week.

The rally has been driven partly by weather. Cotton-growing areas of the United States have experienced heat and dryness, while crop development has been running behind normal levels in some regions. Conditions in China are also attracting attention. Drought has affected Xinjiang, which produces more than 90% of China's cotton, while heat and flooding have hit other major Chinese agricultural regions. The damage could eventually increase China's need for imported cotton.

India presents another weather risk. The country's monsoon is on course to be its weakest in nearly two decades, with rainfall expected to finish about 15% below normal. Cotton, soybeans and corn are among the crops potentially affected.

For the coming week, December cotton has an important technical area around 91.80 cents. Additional resistance has been identified near 93.00 and 94.20 cents, while support sits around 88.70 cents. That gives cotton considerable room for movement if weather forecasts change or new export demand appears.

Cocoa Surges Again

Cocoa futures produced one of the biggest moves in commodities late in the week.

December U.S. cocoa futures closed Friday around $6,648 per metric ton, up about 7.7% for the session. The contract had finished Monday near $5,945, meaning cocoa gained nearly 12% between Monday and Friday.

The longer-term supply picture remains uncertain. Ghana's cocoa regulator has projected that production could fall at least 16% during the 2026-27 season. Disease, weather problems, aging trees and illegal mining have all affected production. Ivory Coast is also facing production concerns.

At the same time, traders are trying to determine whether high cocoa prices have permanently reduced demand. West Africa's main crop harvest is arriving, and favorable rains could improve future production. Those competing forces make cocoa one of the most difficult commodity markets to predict.

Another week of large percentage swings would not be surprising.

Coffee Attempts to Stabilize After Sharp Drop

Coffee followed a very different path.

December arabica coffee futures closed Friday near 312.85 cents per pound. The contract had traded at approximately 341.65 cents on Monday, leaving coffee down more than 8% from Monday's close despite a small rebound Friday.

Brazil remains central to the outlook. Rain has complicated harvesting in some producing regions, while supplies of higher-quality coffee have been relatively tight. Traders are also watching the effects of El Niño throughout global coffee-producing regions.

A recent study has also challenged the idea that robusta coffee can easily replace arabica as temperatures rise. Robusta tolerates heat relatively well but remains vulnerable to drought, creating longer-term concerns for production in Brazil, Vietnam and India.

Coffee therefore enters September in an unusual position: prices have fallen sharply in a matter of days, but many of the supply concerns that helped drive the earlier rally have not disappeared.

Sugar Pulls Back From Its Rally

Raw sugar has also been volatile.

October Sugar No. 11 futures settled Friday at approximately 17.56 cents per pound after trading as high as 18.66 cents during the session. Sugar had recently reached its highest level in more than a year before profit-taking and renewed discussion of global supplies pushed prices lower.

India remains a major factor. The government authorized one million metric tons of duty-free raw sugar imports, but refiners and mills may import only about half of that amount because domestic prices have fallen enough to make imports less attractive.

Brazilian production and weather will also remain important. After the market's rapid August advance, sugar could be particularly sensitive to any indication that supplies are improving.

Orange Juice Continues Its Wild Year

Orange juice futures remain far below their levels from a year ago.

November frozen concentrated orange juice futures ended Friday near 145 cents per pound, down from 158.95 cents on Monday. The contract has lost roughly 41% over the past year and has traded between approximately 130 and 270 cents during the past 52 weeks.

Florida weather and Brazilian production remain the principal variables. With the Atlantic hurricane season approaching its historically most active portion, tropical weather could quickly become a much bigger factor for orange juice futures during September.

Wheat Becomes One of the Biggest Agricultural Stories

Wheat could be the agricultural contract to watch most closely.

December Chicago wheat closed Friday near $7.92 per bushel, gaining about 2.3% during the session. It finished Tuesday near $7.36, Wednesday around $7.65 and Thursday around $7.75 before making another jump Friday.

The reason extends far beyond normal crop weather.

Escalating attacks on Black Sea grain infrastructure have raised fears about exports from Russia and Ukraine. Together, the two countries represent an enormous portion of international wheat trade. Disruptions to ports, terminals and shipping routes have therefore pushed a geopolitical risk premium back into wheat prices.

Weather is adding another layer of uncertainty. Extreme European heat and the developing El Niño pattern are threatening production in several important wheat-growing regions.

Wheat's recent rally has been fast enough that profit-taking could occur at any time, but the market may remain supported as long as Black Sea exports remain threatened.

Soybeans Rally Toward $13

November soybean futures ended Friday near $12.88 per bushel, up about 1.6% for the day. They were around $12.24 on Monday, producing a gain of more than 5% in four sessions.

Weather is again playing a major role. China has suffered heat and flooding in important soybean-growing regions, while parts of the United States remain dry heading toward harvest. India's poor monsoon has also raised questions about soybean production there.

Export demand will therefore be closely watched. Any indication of additional Chinese agricultural purchases could quickly move soybeans and corn.

Corn Holds Above $5.30

December corn futures ended Friday around $5.36½ per bushel.

China could become an increasingly important part of the corn story. Weather damage has affected parts of China's corn belt, raising the possibility that the country will need additional imported feed grains. China has also committed to purchasing substantial quantities of U.S. agricultural goods through 2028, although tariffs remain an obstacle to larger purchases.

U.S. weather forecasts will be watched closely as the crop moves toward harvest. The USDA's weekly Crop Progress report arrives Monday afternoon and will give traders another look at corn, soybean and cotton conditions.

Cattle Fall While Hogs Rebound

Livestock futures ended the week moving in opposite directions.

October live cattle finished Friday near $211.73 per hundredweight after falling $1.20 during the session. The October contract lost approximately $6.20 during the week. October lean hogs, meanwhile, finished near $81.90 after gaining $1.275 Friday and roughly $1.02 for the week.

Feed costs could become increasingly important for livestock prices if the rallies in corn and wheat continue. Higher grain prices eventually raise costs for cattle, hog and poultry producers.

Crude Oil Starts the Week Near $83

West Texas Intermediate crude finished Friday at $83.40 per barrel, down approximately 4.2% for the week. Brent crude ended at $89.31, down about 5.4%.

The decline does not mean geopolitical risk has disappeared.

Oil traders remain focused on the Strait of Hormuz, Iran and potential alternative export routes. Roughly one-fifth of global oil normally passes through Hormuz, making developments there capable of producing unusually large price movements. Increased Saudi shipments, alternative Iraqi routes and talk of additional Venezuelan supplies have recently eased some supply fears.

The next U.S. petroleum inventory report is scheduled for Wednesday, September 2.

Natural Gas Could Benefit From Continued Heat

October natural gas futures settled Friday at approximately $2.89 per million British thermal units.

The contract gained about 2.7% for the week, helped by hot weather and stronger demand from LNG export terminals. U.S. storage remains above the five-year average, but that surplus has been shrinking.

September temperatures will be particularly important. Continued heat would keep electricity demand elevated as utilities burn more natural gas to run air conditioners.

Gold and Silver Face a Stronger Dollar

Gold finished the week around $4,478 per ounce, losing approximately 3.25% for the week. Silver fell about 3.65% to $66.995 per ounce.

The pressure came after Federal Reserve Chairman Kevin Warsh emphasized persistent inflation concerns. Markets sharply increased expectations for a possible September interest-rate increase, pushing Treasury yields and the dollar higher.

Those forces generally create difficulties for precious metals because gold and silver do not pay interest.

Friday's U.S. employment report could therefore produce another substantial move in metals.

What Traders Will Watch This Week

The USDA releases its Crop Progress report Monday, August 31, providing updated information on cotton, corn, soybeans and other crops. Tuesday brings additional USDA data on cotton consumption, grain crushing and oilseed processing. Weekly U.S. agricultural export sales are scheduled for Thursday, September 3.

China's manufacturing data will also matter because China is one of the world's largest consumers of agricultural commodities, metals and energy. Economists expect China's official manufacturing PMI to remain below the 50 level separating expansion from contraction.

The biggest financial event may arrive Friday with the August U.S. employment report. Recent forecasts suggest relatively modest job creation following July's unexpectedly weak performance. The report could materially change expectations for the Federal Reserve's September meeting.

Weather, geopolitics and interest-rate expectations are converging to make the opening week of September an unusually important one for commodity futures.

That means the coming week is not simply a weather market. Cotton, wheat, coffee, cocoa and grains will be reacting to crop conditions, but the dollar, interest rates, China, Iran and the Black Sea could be just as important.

Cotton begins the week close to recent highs, cocoa has regained powerful upward momentum, soybeans and wheat are rallying, coffee is attempting to stabilize after a steep decline, and crude oil remains exposed to geopolitical headlines. With so many markets sitting near important price levels, the first week of September could produce some of the largest commodity moves seen since midsummer.