Cocoa Attempts Rebound

COCOA

March Cocoa was higher early Monday after falling to another new contract low on Friday. The market came under severe pressure last week in the wake of disappointing fourth-quarter grind data out of Europe and Asia and then on reports of heavy supplies arriving at ports in Ivory Coast. The grind numbers had been released the previous week but the repercussions carried through the market all last week. The International Cocoa Organization last week estimated global stocks at 1.32 million tons at the end of the 2024/25 season last September versus 1.27 million tons the previous year. This was close to the forecasts the ICCO had produced recently and was still the second-lowest since 2001. Reports last week that the higher farmgate prices in Ivory Coast has encouraged farmers to aggressively sell their beans added to the selling. Ivory Coast port arrivals data has been lagging, which suggests the aggressive farmer selling is a recent development. The weather in West Africa has turned seasonably dry and is not raising any alarms about production. Wetter than normal conditions in December seemed to boost production expectations. A severe Harmattan wind can damage crops, but so far it has been mild.

COTTON

March Cotton sold off sharply overnight and was close to taking out the contract low from December at 62.97. The winter storm is bringing much needed moisture to the US cotton belt but it is also disrupting sales. Democrats in the US senate are threatening to vote against funding legislation that includes money for the Homeland Security Department that oversees ICE in the wake of the shooting over the weekend in Minneapolis, with raises the risk of a partial shutdown. Cotton is not getting much support from a collapse in the dollar last week. Neither has it drawn much support from two weeks of strong export sales, as trader are apparently not convinced that cotton demand will improve.

SUGAR

March Sugar was moderately higher early Monday but inside the lower end of Friday’s selloff. There was some additional evidence last week that low sugar prices will discourage production in 2026/27, with the Brazilian sugarcane growers’ association Orplana saying last week that farmers are reducing their investments due to low prices and high costs of production. Strong Asian production for 2025/26 leaves an overhang, and there is still a large surplus expected.  India may be waiting in the wings with an exportable surplus. El Nino is expected to arrive later this year, but the question is whether it will arrive on time (and be strong enough) to reduce monsoon rainfall for Thailand or India.

COFFEE

March Coffee was higher early Monday as it continued its climb off last week’s lows. The market has been inside a trading rang for the past several months, and last week it had another failed attempt to break though the bottom. Warly forecasts for 2026/27 Brazilian production are coming in, with Sucden projecting 72.5 million bags of arabica and robusta combined. This would be up from 64 million in 2025/26. They look for arabica production to reach 47.5 million bags, up from 39 million in 2025/26, with robusta output expected to be unchanged at 25 million. Harvest begins in April or May. The weather in Brazil continues to looks favorable, with growing areas seeing rain over the weekend, but growers stress the season still has a long way to go. ICE certified arabica stocks increased 5,396 bags on Friday to 447,855, the highest since January 15. Stocks increased 1,177 last week.

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