Cocoa Selloff Continues

COCOA

July Cocoa gapper lower early Monday and fell to its lowest level since May 4, as the market continued its selloff from last Monday’s four-month high. Last week, Bloomberg reported that Ivory Coast had raised its 2025/26 production forecast to 2.0-2.2 million metric tons, up from 1.8-1.9 previously, due to good growing weather. World Weather Inc. expects frequent and sufficient rainfall to support cocoa crops in west-central Africa over the next week. El Nino may eventually bring dry conditions to key production areas in west Africa, but the effects may not be felt until late this year. Ivory Coast fertilizer retailers told Reuters last week that up to 90% of their fertilizer and crop protection products remained unsold because farmers could not afford or were reluctant purchase them because them because of the low returns they have seen from last year’s output. The key treatment period for farms that typically runs from April to June.

SUGAR

July Sugar was lower early Monday, extending its selloff from last Wednesday’s high ever so slightly. A key factor in the market’s rally off the April was the expectation that higher Brazilian ethanol production this year would result in lower sugar output, but last week sugar producer Tereos said that Brazilian processors are likely to produce more sugar than initially planned owing to a bigger-than-expected cane crop and the recent dry conditions in center-south Brazil that have been ideal for harvest. On top of that, dealers told Reuters that sugar is currently more profitable to produce in Brazil than hydrous ethanol, depending on the location of the mill, which is tempting some companies in to ramp up sugar output. However, Datagro estimated last week that Brazilian ethanol exports would reach 2.2 billion liters (581.1 million gallons) in 2026/27 from 1 billion liters in the previous season.

COTTON

July Cotton was higher early Monday after last week’s collapse from Wednesday’s contract highs. The market sold off last week on disappointment there was no announcement from the Trump/Xi meetings that China was committing to buy US agricultural products. However, US Ambassador David Perdue said on Monday that China will buy $17 billion of US agricultural products through 2028. Compounding the disappointment last week was the export sales report that showed US cotton sales for the week ending May 7 showed 2025/26 sales the lowest since the marketing year began and combined sales for 2025/26 and 2026/27 the lowest of any current and new crop combined sale since the 2024/25 season. Widespread drought is still being seen across US growing areas, but Texas could see some much needed rain this week. World Weather Inc. says West Texas and the Texas Panhandle will receive rain Wednesday into Thursday with amounts of 0.50 to 1.50 inches and local totals over 2.00 inches possible.

COFFEE

July Coffee was slightly higher early Monday after falling to its lowest level since last August on Friday. The Brazilian real gapped lower on Friday and closed down 3.7% from last week’s high, and this may provide some impetus for Brazilian growers to start pricing new crop sales. Safras & Mercado said on Friday that Brazilian coffee producers had sold 86% of their 2025/26 crop as of mid-April, down from 96% a year earlier and a five year average of 94% for this point in the year. New crop (2026/27) sales were 16% of expected production. Harvest progress was 6% versus 7% a year earlier.

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