Cocoa Holds Narrow Range

COCOA

May Cocoa was lower early Monday, still inside the narrow $300 range of the past four weeks. Expectations for an strong mid-crop out of West Africa this season and ongoing concerns about demand have limited the market’s recovery off its 2-year-plus low from February. Traders are looking ahead to the first-quarter grind data on April 16. Dealers have told Reuters they look for Europe’s grind to be down 2% to 4% and North America’s down 10% to 12% from last year. Hershey’s recently said they would return to using full milk chocolate for various chocolate candies after a backlash from their experiments with substitutes for cocoa butter. Perhaps this is an earl hint of recovering demand.  World Weather Inc. expects less frequent and less significant rain for west-central Africa this week. ICE cocoa stocks increased 9,473 bags on Thursday to 2.375 million, their highest since September 9, 2024. Stocks increased by 17,968 bags last week.

SUGAR

May Sugar fell below last week’s low early Monday but was back in positive territory later in the session. Indian trade officials told Reuters last week that they expect the nation’s sugar production to fall below consumption for a second straight year because lower cane yields due to excessive rainfall have forced mills to close faster than usual this year. The India head of a global trade house said production is unlikely to exceed 28 million metric tons this season. This is much lower than forecast of around 31 million tons from the Indian Sugar & Bio-Energy Manufacturers Association (ISMA) and the National Federation of Cooperative Sugar Factories Ltd (NFCSF) had forecast production of around 31 million tons versus domestic demand expectations of 28.5 to 29 million.

COFFEE

May coffee was higher early Monday but inside Thursday’s range. The market has had difficulty building on its rally off the February lows, as good growing weather in Brazil, expectations for a large on-year crop there, and concerns demand due to the interruption of shipments into the Persian Gulf have limited the market’s upside. Tight old-crop supplies, the concerns about fertilize availability, and a strong Brazilian real that lower the incentive for Brazilian producers to sell for export provide some support. The May Brazilian Real reached new contract highs on Thursday, while the nearby contract is close to the 15-month high from February. Vietnam government data showed the nation exported 585,000 metric tons of coffee in the first quarter, up 14% from a year earlier. That included 217,000 tons in March. World Weather Inc. says waves of rain will fall in coffee areas from Parana to northern Minas Gerais during the next week to ten days. Most coffee areas will be impacted at one time or another.

COTTON

May Cotton was higher early Monday and was holding near last Tuesday’s pre-plantings report high. The report was a bearish surprise, with planting showing an increase from last year, but that had not deterred the market from holding near its highest level since last July. The stock market was higher early Monday on reports of a framework for a peace plan being presented to the US and Iran by Pakistan, and this lends support to cotton on ideas it will ease demand concerns. The dollar index was lower as well, which is supportive to cotton on ideas it makes US cotton more competitive on the global market. Crude oil backed off from new contract highs from earlier in the session. Higher crude oil prices lend support on ideas it makes polyester more expensive to produce. Dry cropland in Texas and much of the US cotton belt has raised concern about this year’s crop. The latest weekly US Drought Monitor showed an area representing roughly 94% of US cotton production was under drought as of March 31, up from 91% the previous week and 34% a year ago.

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