Cocoa Fund Buying Falls Flat

COCOA

March Cocoa was near unchanged to slightly lower early Friday, inside Thursday’s wide range. The trade is expecting index funds to be buyers of 30,000 to 40,000 contracts over the next week on rebalancing and with the inclusion of the NY cocoa futures in the Bloomberg Commodity Index. So far the action has been less than impressive, as it has only sparked a move toward the upper end of a four-week trading range and short of previous highs from December 29 and December 11. World Weather Inc. said on Thursday that rain in parts of Ivory Coast and Ghana caused some interruption to harvest Wednesday and that more were likely to occur Thursday. Drier weather today and into next week should improve conditions. The trade will be looking ahead to the fourth-quarter grind data from Europe, Asia, and North America, which is scheduled to be released on January 15.

SUGAR

March Sugar was lower early Friday, as the market continued its sideways pattern of the past two months. The market has been attempting to establish a low since it fell to its lowest level in five year in November. Funds are still heavily short despite five weeks of consistent buying, and low sugar prices have encouraged Brazilian cane crushers to focus more on ethanol. But the large surplus hanging over the market limits upside potential. Reuters reports that Indian mills have signed export contracts for around 180,000 metric tons of sugar this season, supported by a drop in domestics prices and a weaker rupee. The government has permitted exports of 1.5 million metric tons in this year. Thailand’s Sugar Board said on Friday that it expects the nation’s sugar output to reach 10.3 million metric tons in the 2025/26 production year. This is close to the USDA forecast for 10.25 million and is up from roughly 10.0 million in 2024/25. For 2026/27, they Board is looking for production to fall back to 10 million. The US Climate Production Center on Thursday said there was a 75% chance that La Nina would fade into an ENSO-neutral condition between January and March.

COTTON

Once again, March Cotton is backed off from a sharp rally this week, as the trade is not getting consistent bullish news from the export sales data. It doesn’t help that the dollar is trending higher this week, which makes US cotton less competitive on the global market. Thursday’s report showed US cotton export sales for the week ending January 1 at 98,031 bales for the 2025/26 (current) marketing year and 22,491 for 2026/27 for a total of 120,522. This was down from 136,204 the previous week and the lowest since October 30 and probably a disappointment after they climbed above 300,000 three weeks prior. Cumulative sales for 2025/26 have reached 6.598 million bales, down from 7.615 million at this time last year and below the five-year average of 9.431 million. Sales have reached 59% of the USDA forecast versus a five-year average of 76% for this point in the marketing year, suggesting the USDA could lower its forecast in upcoming supply/demand reports.

COFFEE

March Coffee was lower early Friday as anxiety over Colombian supply eased on news that US President Trump and the President of Colombia had spoken to each other over the phone this week. Colombia on Thursday reported its December washed arabica production at 1.233 million bags, down from 1.798 million a year prior. This was the third straight month production had fallen behind year ago levels. The 12-month total was 13.377 million bags, down from 13.977 million in 2024. It was also the first time the 12-month total had fallen behind year-ago levels since November 2023. This is not a big surprise, as the nation is coming off a particularly strong year and production had been trending lower for several months. Colombia is the world’s third-largest coffee producer after Brazil and Vietnam. World Weather Inc says an active weather pattern will continue in coffee areas of Indonesia through the next week. The ground is saturated and there is a some risk of flooding. La Niña, which typically brings more rainfall to the Indonesia is expected to conclude by the end of the first quarter.

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