West Africa Rains Support Cocoa

COCOA

July Cocoa was higher early Monday following a steep selloff on Friday. El Nino could pose a threat to the West African crop, eventually, but in the meantime the region is getting adequate to ample rains. World Weather Inc. said moderate to heavy rain fell in eastern and southern parts of Ivory Coast over the weekend. Rain was much lighter in Ghana, although satellite imagery suggested a few areas of moderate rain may have occurred. Portions of Nigeria reported mostly light to moderate rain. Frequent waves of rain are expected over the region during the next two weeks, bringing timely rainfall to all cocoa production areas. ICE cocoa stocks increased by 3,573 bags on Friday to 2.929 million, their highest since July 31, 2024. Stocks increased by 82,117 bags last week.  Friday’s Commitments of Traders Report showed managed money traders were net sellers of 2,964 contracts of cocoa for the week ending June 2, increasing their net short to 21,111. This is their biggest net short since November 2022.

COFFEE

July Coffee was higher early Monday, managing to hold above Friday’s 18-month lows. Dry conditions in Brazil’s key production areas have allowed the harvest to advance, but increased rainfall this week could cause some interruptions. World Weather Inc. said over the weekend that waves of rain and a few thunderstorms are expected Wednesday through Friday of this week. Moisture totals will vary from 3 to 15 millimeters each day with a few totals for the week getting to 35 millimeters. The precipitation will impact Cerrado Mineiro, Sul de Minas, Zona da Mata and areas southward into Parana and is expected to disrupt coffee maturation and harvesting in several areas with a little concern over bean quality. Most of the crop should come through the wet period just fine. Safras & Mercado reported that Brazil’s 2026/27 coffee harvest reached 23% of the planted area as of June 2, behind 28% last year at this time and the five-year average of 27%. The Arabica harvest reached 17%, compared with 21% last year and a five-year average of 20%. The robusta harvest reached 34%, versus 40% last year and on average. Humidity hampered activities in some areas, but harvesting increased seven percentage points from the previous week.

COTTON

July Cotton held Friday’s low on early Monday and was trading both sides of unchanged. The market has been under heavy liquidation pressure for the past few weeks once timely rains arrived to the cotton belt, particularly west Texas, but rainfall amounts have been short of what is needed. Adding to the pressure on the market has been a strong US dollar, which reduces the competitiveness of US cotton exports. US export sales have been less than stellar recently after reaching a record for the season in late March and a couple of strong weeks in early April and mid-May. World Weather Inc. said west Texas rainfall was a bit disappointing last week when not as much rain fell as had been forecast. They expect precipitation to remain sporadic and light this week, leaving dryland areas in a big need for a significant rain. Other cotton areas in Texas and Oklahoma are doing better, but all areas would still benefit from some timely rain. The Delta continues to have favorable soil moisture while the southeastern production areas are doing okay, but will need rain soon as well. The weekly Crop Progress report will be released this afternoon. So far this season plantings have proceeded at a normal pace.

SUGAR

July Sugar was higher early Monday but inside Friday’s range. The market has traded in a sideways, choppy pattern recently, finding support from prospects of lower production this year due to a greater focus on ethanol and the problems that El Nino could pose to monsoon rainfall amounts in India and southeast Asia. Word Weather Inc. expected said India’s monsoon rainfall to continue to be poorly distributed this week. The middle and lower west coast will get frequent bouts of heavy rain, and the same is expected from eastern Bangladesh into the far Eastern States. This covers part but not all of the sugar producing areas. A large part of far southern India and the central and northern parts of the nation will remain unusually dry and warm to hot. Brazil weather was generally dry and should have been beneficial for sugarcane maturation and harvesting over the weekend, but the center south is expected to get rain Wednesday into Saturday. A recent survey 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.

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