Cocoa Rally Gains Traction

COCOA

May Cocoa put in an impressive rally yesterday relative to recent weeks but it is still within the consolidation of the past month. However, the momentum for the moment seems to be with the buyers, perhaps because prices have fallen back towards “normal” levels and the increase in Ivory Coast port arrivals last week may suggests business is getting done now that official prices have been set lower. Expectations seem to be low for the first-quarter grind data, which is expected to be released April 16. Reuters reported dealers expecting Europe’s grind to be down 2% to 4% from a year ago and North America’s down 10% to 12%. They also think grind will remain weak in the second quarter with a modest recovery later in the year.

COFFEE

May Coffee was lower early Wednesday following a modest recovery on Tuesday. The market is caught between strong production expected out or Brazil this year and persistent tight supply. Worries over Mideast demand due to the war have also pressure the market. Data from the Coffee Trading Academy (CTA) showed Japan’s coffee stocks at 2.21 million bags in February, little changed from January and from a year ago and well below the five-year average of 2.75 million bags for this time of year. European green coffee stocks were at 6.8 million bags in February, down 7.5% from January and 8% below the same period a year ago. This is down from 14 million bags in mid-2022. Indonesia’s Sumatra robusta coffee bean exports fell to 12,921 metric tons in February (215,350 bags) a 25.4% decrease from a year earlier, according to local trade office data.

COTTON

The cotton market reversed lower in the wake of the plantings report on Tuesday and was sharply lower again early Wednesday. The USDA Prospective Plantings Report showed US 2026 cotton planted area at 9.640 million acres, which was above expectations and up from 9.400 million in the February Outlook Forum Data. Plantings are still expected to be down from 11.18 million in 2024/25 and the second lowest since 2015/16. Texas plantings were estimated at 5.52 million acres, up 119,000 from 2025 (+4%). Plugging this number into the supply/demand balance sheet and leaving other numbers unchanged from the February Outlook Update (including a 19% abandonment rate and a yield of 856 pounds per acre) would put US 2026/27 ending stocks at 4.55 million bales and the stocks/use ratio at 32.9%. This would be up from 30.4% in the February Outlook Forum numbers and 32.4% for 2025/26. It would also be the highest stock/use ratio since 42.7% in 2019/20. If dry conditions in Texas persist, the plantings number could be revised down in the June acreage update. The abandonment rate could be increased as well.

SUGAR

May Sugar extended its selloff from Monday’s 5 ½ month high early Wednesday, falling to its lowest level since March 19. The selloff anticipated Tuesday’s selloff on crude oil. The market had drawn support from a higher energy prices on ideas that this would encourage cane crushers to produced focus more on ethanol than sugar. This had already started to happen in Brazil prior to the Iran war, as crusher were reacting to low sugar prices. The trade is still waiting for the Brazilian state oil firm Petrobras to increase gasoline prices. Czarnikow revised its global sugar production forecast to 184.5 million metric tons for 2025/26, up 100,000 tons from its previous estimate, citing improved crops in Pakistan, Thailand and China. Pakistan’s output increased by 800,000 tons to 7.5 million, Thailand’s was +400,000 tons to 11.5 million, and China’ was increased by 300,000 tons to at 12.3 million. India’s output was cut to 28.6 million tons from 30.2 million after early mill closures. However, global sugar consumption was revised up by 400,000 tons to 178.2 million, partly due to stronger-than-expected Russian consumption, which actually resulted in tighter global surplus, 6.3 million tons. They expect the surplus to tighten further to 1.4 million in 2026/27.

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