Ivory Coast Raises Cocoa Premiums

COCOA

July Cocoa was near unchanged early Wednesday after a strong performance on Tuesday. A Reuters story said Ivory Coast had sold about 1 million metric tons of cocoa in export contracts for the 2026/27 main crop and that it has started to slow its sales due to concerns about the potential impact that El Nino will have on output. El Nino could bring drought to cocoa producers including Ivory Coast, Ghana, Cameroon and Nigeria, and one source spoke to Reuters of the “fragility” in the development of the mid-crop and the next main crop. It was very hot between January and May, and some expressed concerns that the rains of the past few weeks has not been enough to make up for it. Others a split on whether El Nino will impact production to any significant degree, with some more concerned about the lack of fertilizer usage due to high prices. World Weather Inc. said areas from Ivory Coast to southeastern Nigeria and Cameroon will see another week of favorable conditions for development and that all areas will see multiple rounds of rain during the period, mostly light to moderate.

COFFEE

July Coffee was lower early Wednesday and was approaching last summer’s low at 256.60, as the market continues its drift lower as it awaits the Brazilian harvest amid tight global supply . World Weather Inc. said rain increased in some coffee growing areas on Brazil Monday and Tuesday, but drier weather was expected to return and last into Sunday, which is needed for harvest and drying. ICE certified arabica stocks fell 2,149 bags on Tuesday to 432,781, their lowest since February 13, thanks primarily to a decline of 1,725 bags of Honduran coffee. There were 1,100 bags of Honduran-origin submitted for grading, of which 825 passed and 275 failed. This left the amount pending grading at the exchanged at 0. Another indicator of tight near-term supplies.

COTTON

December Cotton was lower early Wednesday but inside Tuesday’s range. The market drew support early this week on news that India had lifted import tariffs on cotton, but there is still the issue of the value of the rupee, which fell to a record low relative to the dollar last month. Traders in India said domestic cotton was cheaper than imports. India has been the fifth-largest buyer of US cotton for the 2025/26 marketing year so far, having purchased a total of 626,500 bales as of May 21. (The top buyer this year is Vietnam at 3.747 million bales.) World Weather Inc. said West Texas will get good coverage of rain through the coming weekend, although greater volumes may still be needed in some areas. US cotton was 66% planted as of May 31 versus a five-year average of 67%. The trade has been expecting US cotton planting acreage to come in higher than the March prospective plantings number in light of the rally that occurred after the March data was collected. However, the recurring dryness in Texas up until last week raises concerns.

SUGAR

July Sugar was higher early Wednesday, buoyed in part by higher crude oil prices off renewed hostilities between the US and Iran, as higher energy prices support cane crushing for ethanol versus sugar. A survey conducted by S&P Global Energy has an average expectation for Brazil center-south sugar production for the first half of May at 2.08 million metric tons, which would be down 14% from the same period last year. This would be in sharp contrast to last week’s UNICA update for the second half of April, when production was more than double last year. The S&P Global survey also called for first-half May cane crush at 42.45 million tons, down 0.2% from last year, with total ethanol output (cane and corn-based) projected at 2.13 billion liters, up 19.7%. Reuters published a report on Monday in which they estimated center-south sugar production for the first half of May at 2.12 million tons, down 13.2% from last year. Another bullish factor is uncertainty over Indian and Southeast Asian production on the potential loss of rainfall due to El Nino.

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