Ivory Coast Targets Unsold Cocoa

COCOA

May Cocoa was close to unchanged early Thursday and was respecting Tuesday’s contract lows. Sources from the Ivory Coast government and the nation’s cocoa regulator, the CCC, told Reuters that the Ivory Coast plans to move the official start of the mid-crop season forward, which would allowing CCC to lower the official price paid to farmers. Moving the date up could break the logjam of unsold cocoa and possibly put a floor under prices. The official price for the main crop, which was set last fall, is much higher than the current market price, and this has resulted in large amounts of newly-harvested cocoa going unsold. CCC typically sets a new price for the mid-crop, which usually starts in April. The group has been unwilling or unable to lower the main crop price, but by moving the start of the mid-crop forward, they can start offering at a new, lower price sooner. This is probably the “solution” that the CCC and the cocoa exporters’ group GEPEX referred to earlier this week. The agreement has reportedly enabled the purchase of more than 200,000 tons of release contracts in recent days. The agreement was reported to have been concluded last week.

SUGAR

May Sugar continued its slow grind higher early Thursday, reaching its highest level since February 4. Like cotton, the market has been able to lift itself off contract lows from earlier this month on short covering. Open interest has declined on the rally, and the funds had reached a record net short, which left the market oversold and perhaps lacking in new buyers. The Indian Sugar & Bio-Energy Manufacturers Association lowered its sugar production forecast for 2025/26 to 29.3 million metric tons this week from an earlier estimate of 30.95 million. This was not a total surprise to the market after reports emerged last week that unseasonable rains had reduced yields in some key production areas. The reports have some traded suggesting that India will not export its full quota this year.

COFFEE

May Coffee was bounced off six-month lows this week and respected that low since. After a steep decline since late January, the market has fallen into an area of moderate to heavy consolidation from last summer that could lend support for a while. Good growing weather in Brazil and expectations for a strong crop in 2026 have been priced into the market over the past month. World Weather Inc. says rain has been widespread in Brazil coffee production areas during the past few days, but a more sporadic and light rainfall pattern is predicted next week. This week the US CPC put the chances of ENSO-Neutral conditions lasting through the Northern Hemisphere summer at 56%. This would seem to forestall the threat of El Nino for a while. This bears watching. If and when El Nino does emerge, it could threaten crops in Asia and Africa with hot and dry conditions. It could result in wetter weather to Brazil that could reduce bean quality.

COTTON

May Cotton was lower early Thursday but inside Wednesday’s range. The market has seen a significant bounce off contract lowest form February 6 short covering, as the decline in open interest during the rally attests. The fund net short has reached near-record levels, leaving the market deeply oversold and perhaps lacking new sellers. However, the rally off the lows has corrected an oversold condition on the daily charts. The trade may have also been reluctant to push lower at the beginning of the growing season. For the export sales report this morning, it may be difficult to match last week’s net sales of 499,391 bales (old crop and new crop combined), which was a record for the marketing year and the highest for any week since October 2023. Sales have been consistently above 200,000 bales for six straight weeks and above 300,000 in four of the last six, which is much better than where they were up until then. However, cumulative sales are still at their lowest level in 11 years and they have only reached 75% of the USDA forecast versus a five year average of 88% for this point in the season as of last week. World Weather Inc said yesterday  that south Texas and northeastern Mexico need rain to support planting in early March, and a dry bias will prevail for at least another ten days. West Texas also needs rain, but not much is expected to fall for a while.

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