Cocoa Eases as Rain Concerns Fade

COCOA

September Cocoa was lower early Monday, following through from Friday’s selloff from Thursday’s five-month high. West Africa has apparently seen enough rain recently to raise concerns about disease and flooding, but dry conditions emerged over the weekend.  On Thursday, Ghanaian cocoa farmers were warning Reuters that production would fall sharply in 2026/27 as unusually heavy rains were destroying flowering crops and accelerating the spread of black pod disease. During the El Niño event of 2023/24, West Africa was hit by double its normal rainfall in the summer months, followed by intense heat and unseasonably dry, strong Harmattan winds the following winter. Farmers were also complaining that the cocoa regulator, COCOBOD, had not approved the release of fungicides needed to combat black pod disease. They did not mention swollen shoot disease, another problem that emerges from too-wet conditions that affects overall tree health, not just the current crop. Farmers in Ivory Coast also said recent above-average rains and overcast weather had raised of flooding and disease that could affect the last stage of the mid-crop if they continue.  On the other hand, World Weather Inc. said a more sporadic rainfall pattern occurred over the weekend, leaving portions of Ivory Coast and Ghana dry or in a net drying mode. They added that El Nino is beginning to impact cocoa production areas across west-central Africa and that there has been a notable decrease in the frequency and intensity of rain. However, some of this is typical of July-August, when seasonal rains are normally lighter and often shift farther to the north in Africa.  They say that if this El Nino performs like those in the, past the seasonal return of rainfall in late August and September may be either slow to evolve or much less than usual and that will be a period of time to watch closely.

COFFEE

September Coffee was lower early Monday following through from last week’s selloff from the seven-week high that the market put in on Wednesday. Cooxupe, Brazil’s largest coffee co-operative, had reported on Wednesday that its farmers had harvested 20.1% of their 2026 crop as of June 19 versus 24.3% at this point last year. They blamed unseasonal rains for slowing the harvest and problems with bean quality. However, World Weather Inc. said Brazil coffee areas should be drier than they have been, which should be beneficial to the harvest and to crop conditions. They added that Brazil will not be threatened by any damaging cold. El Nino continues to evolve aggressively and its influence is being seen in the tropical regions of the world, notably Indonesia, a major robusta producer, as well as parts of Vietnam, the world’s largest robusta grower, which are experiencing a light and sporadic rainfall trend.

SUGAR

October Sugar was higher early Monday on follow through from a breakout rally on Friday. The market seems to be alerted to the fact that the extreme heat in Europe could damage their beet crop, as well as concerns about crops in key growing areas of India and Thailand as El Nino sets in. World Weather Inc. did say India’s rainfall is expected to slowly improve across the middle two-thirds of the nation during the coming ten days to two weeks. Sufficient rain will fall to saturate the soil and induce local flooding. Southern Thailand’s rainfall will continue to be limited for another week, but it may increase next week. They added that Brazil sugarcane areas will not be threatened by any damaging cold and weather conditions and that they should be drier than they have been, which will improve harvest conditions after the recent wet bias. Harvest tends to peak for the season in late July or early August. August Crude Oil was only slightly higher overnight after US and Iran agreed to renew their talks over the Strait of Hormuz. Higher crude prices are considered supportive for sugar because they encourage cane crushers to divert more of their activity towards ethanol production.  However, the state of the economy is key to sugar consumption, particularly in Asia.

COTTON

December Cotton was higher early Monday after falling to its lowest level since June 11 on Friday. The trade could grow cautious ahead of the USDA Acreage report on Tuesday. Last week’s US Drought Monitor showed an area representing roughly 58% of US cotton production was experiencing drought as of June 23, a substantial improvement from 76% the previous week and a peak of 98% from early May. A year ago 3% of cotton production was in an area experiencing drought. World Weather Inc. says West Texas still needs significant moisture, especially in the dryland areas of the southwest. Scattered showers and thunderstorms are possible this week, but rain amounts may be disappointing to many areas and beneficial to a few. They added that conditions in most other US production areas are rated fair to very good, and recent rain should have improved crops considerably in the drier areas of the southeast. The Delta is improving and conditions in the southeastern states are quite varied with most of the cotton doing alright. India’s early season northern crop and Pakistan’s crop were likely planted in a favorable environment this year with early season development advancing well. Rain will be needed soon in west-central and northwestern India to spur on the bulk of main season planting and that may arrive in a week or so. Cotton may see some pressure from weaker crude prices from time to time because cheaper crud this makes polyester less expensive, but on the other hand, the cotton market could also benefit from a stronger global economy, which at the current time appears to be dependent on the Strait of Hormuz reopening and staying that way.

Interested in more futures markets?  Explore our Market Dashboards here.