ICCO Report This Week

COCOA

May Cocoa was moderately higher overnight following a two-day selloff that took it to its lowest level since late November. At the low yesterday, the market was down $1,959 (-19%) from Thursday and down $3,885 (-32%) from the contract high in December. The selloff of the past week coincided with an increase in rainfall in west Africa. World Weather Service expects periodic shower and thunderstorm activity to continue through this week and into early next week. Day to day rainfall is expected to be light and occasionally moderate, but moisture will be possible in nearly all crop areas from southern Ivory Coast through southern Ghana and Benin to Nigeria and Cameroon, and by early next week many areas will have received at least some rain. Ivory Coast farmers told Reuters on Monday that strong rains over most of Ivory Coast’s cocoa growing regions last week have boosted the mid-crop’s potential. West Africa saw no rain in the last 24 hours. Ivory Coast’s agriculture minister said yesterday that the nation’s 2024/25 production is on course to remain around last season’s levels in the wake of the adverse weather. A Reuters poll of analysts put their 2024/25 production at 1.80 million metric tons versus 1.75 million in 2023/24. The same poll put the global production/usage balance nearly flat after three straight years of deficits. ICCO will release its quarterly statistics this week, and they should contain their first estimate for the 2024/25 marketing year. ICE certified cocoa stocks increased by 13,452 bags yesterday to 1.434 million, their highest since December 12. Stocks have increased 50,106 bags over the past five sessions.

COFFEE

May Coffee drifted lower overnight, falling to its lowest level since February 4. Brazil’s growing areas continue to be on the dry side, and this does not bode well for the upcoming crop. However, there are some ideas the market may have gotten overdone on the dry theme. The main factors for Brazil’s 2025 crop are 1) the fact that it is an off year in Brazil’s 2-year cycle and 2) the extreme drought and heat last year that likely affected the trees’ ability to produce a decent-sized crop. Both of these factors have been known for a long time. The recent dry trend in Brazil does not help, but it followed a wetter pattern from late 2024 that built up soil moisture. The question now is to what extent the moisture is being depleted by the recent lack of rain. The trees may be less needy because cherry production is down anyway. Dealers told Reuters yesterday that roaster buying interest is drying up;  perhaps they are taking a wait and see attitude in the wake of the market’s move to all-time highs earlier this month. World Weather Service expects Brazil’s coffee production to see limited rainfall with warm temperatures through the next two weeks, resulting in more crop stress, which they say could reduce cherry size and lower quality for late maturing crops (unless the weather makes a sudden change0. Vietnam, Indonesia and west-central Africa continues to be favorable for this time of year. ICE certified arabica stocks increased by 4,696 bags yesterday to 792,695. Stocks have declined 32,088 over the past five sessions.

COTTON

May Cotton is lower this morning following a rally back to the 9-day moving average yesterday. The market has managed to hold its contract low from February 3, but it is struggling to build momentum for a rally. The dollar fell to its lowest level since mid-December yesterday, which helps the export outlook, but that can only go so far in supporting prices. Export sales have improved slightly over the past few weeks, but cumulative sales are the lowest in nine years. The 2025/25 USDA Outlook Forum is this will provide the first “official’ outlook for the 2025 growing season. A Bloomberg surgery has an average trade expectation of US 2025/26 planted area at 10 million acres (range 8.8-10.1 million), which would be down from 11.2 million in 2024/25. They are looking for production to come in at 13.6 million bales (range 11.6-15.8 million) versus 14.4 million in 2024/25 and ending stocks at 4.7 million bales (range 3.9-6.5 million) versus 4.9 million in 2024/25. Even with an 11% drop in planted area and production down 800,000 bales, the survey has only 200,000-bale decline in ending stocks. A National Cotton Council of America survey of growers recently put plantings down 14.5% at 9.6 million acres. Texas and the southwest will need rain ahead the planting season.

SUGAR

May Sugar saw a reversal lower yesterday after rallying 20% in four weeks, and it may be set for some heavy consolidation for October and November to work through. The market has been supported recently by ideas of lower production in India and the US, and it has seemed to ignore prospects for strong crops out of Brazil and Thailand and the expectations for a global surplus in 2025/26. Reports a couple of two weeks ago that Indian mills were shutting down earlier this usual sparked speculation that the nation would not meet its 1 million-ton export quota. Almost no one mentions the US cane production concerns after the two freeze events in Louisiana, but that could push the US to import more sugar this year. Louisiana represents about 20% of US sugar production. CovrigAnalytic says production in Brazil could intensify towards the end of the year, as the country will likely have a late start to the harvest in 2025. Brazil has been dry in recent weeks, which has lowered expectations for the 2025/26 crop, which begins in April. The next bi-monthly UNICA report on Brazilian center-south production (for the first half of February) is due out this week. The last report showed cumulative 2024/25 production was running 5.5% below last year.

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