Cocoa Rebounds After Grind Data Drop

COCOA

July Cocoa was higher early Friday following a setback on Thursday off low first-quarter grind data from Europe and North America. The North American grind, released late Thursday by the National Confectioners Association, came in at 106,087 metric tons, -3.8% from a year earlier, and the market started off weak in reaction, but it has since moved to higher on the day. The 12-month total was -0.8% from a year ago. The smaller grind came despite the fact 15 plants reported, up from 14 a year ago. During the session on Thursday, Europe’s grind came in at 325,852 metric tons, -7.8% from a year earlier, while Asia’s was 223,503 metric tons, +5.2% from last year. The Asia number was counter to expectations that grind would be the lowest in several years, but there was a hint that it could be stronger after Malaysia reported on Wednesday that its grind was +8.7% from last year.  Brazil will report cocoa grind data on Friday. Swiss chocolate maker Barry Callebaut cut its operating profit forecast on Thursday, citing supply chain disruptions linked to the Iran war and overcapacity in the cocoa market. World Weather Inc. reports that has seen isolated to scattered showers from Ivory Coast to Cameroon, where resulting rain was light to locally moderate and that daily rounds of isolated to scattered and occasionally numerous showers and thunderstorms will continue through the next week.  Rain will be greatest during the early to middle part of next week and should be good for pod development. The US Climate Prediction Center has given a 61% chance for El Nino to emerge during the May-July period. This could bring drier than normal conditions to west Africa later this summer, but it’s too early to tell.

COTTON

July Cotton extended its rally overnight, and the nearby contract reached its highest level since June 2024. The US Climate Prediction Center has given El Nino a 61% chance of arriving between May and July and for it to last through the end of the year. They also said the transition from La Nino to ENSO neutral conditions is now complete. The arrival of El Nion would favor above averages temperatures in July for much of the lower 48 states, except for parts of the Northern Plains, the upper Mississippi Valley, and the Great Lakes, so the above average temps would include most of the cotton growing areas. It is also expect to bring rainfall the monsoon rainfall to India as well, which could be critical for cotton production there. The extremely dry conditions in Texas and other parts of  the Cotton Belt mean rainfall is essential. As of Tuesday 97% of US cotton growing area was under drought.

COFFEE

July Coffee was lower early Friday, as the market continued to back off from last week’s modest recovery. The market has been in a sideway pattern for the past 2 ½ months, as the trade awaits the arrival of the Brazilian crop. Earlier this week Safras & Mercado raised their forecast for Brazil’s 2026/27 coffee crop to 75.65 million bags, up 4.65 million from their previous estimate and up 17% from 2025/26. Arabica production was forecast to be +29% from 2025/26. They also reported that Brazil farmer sales of new crop had reached only 14% of the expected production versus a five year average of 23% for this time last year. The arabica harvest is expected to begin next month. Brazil has entered its dry season, so there may be limited downside until the new crop arrives. World Weather Inc reported mostly dry conditions have emerged in Brazil this week and that rainfall should be erratic during the next week. Net drying is expected in most areas, which is not unusual for this time of year. Parts of the Central Highlands of Vietnam received another round of light to locally moderate rain Wednesday and with regular rounds of showers expected during the next week rain-fed coffee areas should see an increase in flowering. The US CPC has given El Nino a 61% of arriving during the May-July period. These events can bring drier than normal conditions to Africa, Indonesia, and India.

SUGAR

July Sugar made a new low for the week early Friday and fell to its lowest level since February 18. Record deliveries against the expiring contract of London white sugar point to burdensome supply overall. The market is still looking at a large global surplus for 2025/26, even as production expectations for 2026/27 slip. The expected arrival of El Nino later this summer has lowered expectations for the Indian monsoon, which could lower their sugar cane production. Weather models suggest this year’s editions will be strong. The India Meteorological department is forecasting a below average monsoon at 92% of the long-period average. This week the US Climate Prediction Center moved up the arrival date to May-July. The American Sugar Alliance has asked the US Trade Representative to take action against countries it says are flooding the domestic market with sugar.

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