March Cocoa Pressured by Favorable Rains

COCOA

March Cocoa was sharply lower early Wednesday and managed to fall back below the 50-day moving average and was close to testing the low of the trading range of the past month. Reports this week from Ivory Coast farmers that last week’s moderate rains were boosting expectations for a strong finish to the October-March main crop may have pressured the market. World Weather Inc. said today that dryness is not much of a problem for any of the world’s cocoa production areas, except possibly Ecuador, where December rainfall was below normal. One concern is the possibility of disease issues in some of the wetter areas of Indonesia and some areas of Africa. West Africa’s recent wet-biased conditions have likely slowed harvesting and drying, and this could cause disease issues that affect crop quality. The Harmattan wind has been slow to develop, but there is still time for increased wind and warmer weather. They say the odds are relatively good that seasonal rains will return quickly in February. There is some potential that premature flowering may have occurred because of the more abundant rain than usual in recent weeks, and if that is the case the market will need to keep a close watch on February rainfall as a delay could impact the early setting pods.

COTTON

March Cotton was higher early Wednesday within the upper end of Tuesday’s range. The market broke above the 50-day moving average on Tuesday for the first time since September, which but it has not held above that line for more than a week since march. Reports that Brazil shipped a record 452,500 metric tons of cotton in December may not be the best news for US exporters, but at least it shows active demand. December shipments were up 28.2% from a year earlier, following a record harvest of more than 4 million tons in the 2024/25 season.
Brazil exported 3.03 million tons in 2025, up 9% from the previous year, according to the cotton exporters’ group Anea. US export sales have improve a bit recently, but they are still well behind the average pace needed to meet the USDA forecast. Increasing Chinese raw cotton and yarn prices could be forcing futures higher. There are also sellers and buyers who have concluded deals but have yet to fix prices. Expectations for lower plantings in the US and Brazil in the coming year next year, with prices currently hovering around five-year lows, may also be lending support. The USDA Outlook Forum in February will give an early estimate for US plantings this year.

COFFEE

March Coffee extended its rally early Wednesday and traded to its highest level since late November. Growing weather is good and ICE exchange stocks are higher, but one impetus for the rally may be the recent hostile rhetoric between President Trump and the President of Colombia, which is the second largest supplier of arabica coffee to the US. World Weather Inc. does expect a decline in rain intensity and frequency in Brail growing areas over the coming week to ten days, especially in Minas Gerais and Espirito Santo, where it has been abundantly wet in recent days, but at this point it does not appear to be much of a threat to crops. In Vietnam, a few showers and thunderstorms will occur periodically along the coast during the next week, but only a few showers are expected to reach into the Central Highlands or any other coffee production region. Some minor disruptions to farming activity should occur for very brief periods of time, and the environment will remain favorable for good harvest progress. There is a risk of flooding in some production areas of Indonesia, as an active weather pattern is expected to continue through the next week. The ground is saturated. However, the NY arabica futures seem
to be leading the London market higher this morning, suggesting the robusta trade is not overly concerned about the weather. ICE certified arabica stocks increased 4,125 bags on Tuesday at 457,031, their highest since October 23.

SUGAR

March Sugar broke above a recent trading range early Wednesday, trading to its highest level since Friday. There are some ideas floating about that low prices will lead to a reduction in planted area in 2026. There has also been some movement by cane crushers in Brazil towards ethanol production and away from sugar. The most recent UNICA report showed that’s sugar’s share of crush for the second half of November was 35.5% versus 44.6% for the same period in 2024. However, downward pressure on crude oil prices may limit that appeal.
There is still a glut of supply that could limit upside, even if the market is still within the vicinity of four-year lows. India could export as much as 1.5 million tons this year if prices move high enough. We expect the UNICA update for Center-South Brazil cane crush and sugar production during the first half of December to be released this week. The last report showed that cumulative production for 2025/26 was running about 1.1% above a year ago.

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