Cocoa Grind Mixed Across Regions

COCOA

December Cocoa started out higher overnight after the North American third-quarter cocoa grind came in with a surprising increase over a year ago, but then it gave back its gains when the Asian grind came in a little worse than expected. The North American grind was 112,784 tons, up 3.2% from the same period last year, which was a surprise considering that prior to the report the trade had been expecting a decline of 5%-8%. Asia’s third-quarter grind was 183,413 metric tons, down 17% from the third quarter of 2024 but up from 182,118 in the second quarter. This was their lowest third-quarter grind in nine years. A survey ahead of the report suggested the trade was expecting to see the lowest number in at least eight years. The European grind, which was released in advance of yesterday’s open came, in at 337,353 metric tons, down 4.8% from the same period last year. This was the lowest for the quarter in 11 years (since 2015) and was mostly in line with expectations from a Bloomberg survey calling for it to be the lowest in at least a decade. The total grind from the three regions came to 633,550 tons, down 7.5% from 684,803 last year. World Weather Inc. expects regular showers and thunderstorms through the weekend across West African growing regions, with a diminishing trend next week. A mix of rain and sunshine is ideal.

SUGAR

Yesterday’s UNICA report came in at the bearish end of expectations, but the market did not break on the news. The report showed Brazilian Center South sugar production for the second half of September at 3.137 million metric tons versus expectations of around 3.05 million. However, this was not a dramatic departure from expectations or from the trend of recent weeks. Sugar’s share of crushing for the period was 51.2%, down from 53.5% for the first half of the month but up from 47.7% a year ago. The slow start for the rainy season in Brazil may start to raise concerns about the upcoming crop. The region usually sees a pattern of pre-monsoonal rainfall develop in late September/early October, but rains have been light so far this year. Not a panic situation yet, but growers could get more concern if the rains do not evolve by early November.

COTTON

December Cotton was higher overnight and seemed to gain momentum as it pushed above the 9-day moving average, something it had not managed to do since mid-September. The break to new contract lows at 62.71 this week may have inspired some cash market buying and/or short covering. There have been no weekly export sales reports for two weeks, but the recent weakness in the US dollar does make US cotton a bit more attractive on the global market. The nearby Dollar Index closed lower for three straight sessions this week and fell to its lowest level since October 6. This was after reaching its highest level since August 1 last week. The possibility that President Trump will meet with Chinese leader Xi at an economic conference at the end of the month offers a glimmer of hope for a trade deal. This is especially important to the soybean market, less so for cotton. China has been a major buyer of US cotton some year, but their crop appears to be in good shape this year, based on the weather reports. In recent years they have favored Brazilian cotton, perhaps because of high US prices in the wake of a disappointing crop one year but also for political reasons after the US targeted textile imports from Xinjiang on accusations of forced labor.

COFFEE

December Coffee was close to unchanged overnight and inside yesterday’s range. On the bearish side are hopes that the US and Brazil will work out deal that will end or at least lower the current 50% tariff on Brazilian imports, and on the bullish side is the lack of rain in Brazilian growing areas. The Brazilian Foreign Minister was upbeat after meeting with US Secretary of State Rubio yesterday, saying the both governments will work in the next few weeks to set an agenda of meetings for trade negotiations. There is a good chance of rain in Brazilian growing areas over the weekend, but World Weather Inc. says the precipitation may be to erratic for a general improvement in soil and crop conditions. More rain will be needed to best support flowering, pollination and early cherry setting. Normally, the region sees pre-monsoonal rains develop in late September and early October, but that has not happened yet. There is still time, but if more consistent rains do not develop by the beginning of November, growers may become concerned. ICE certified coffee stocks fell 775 bags yesterday to 493,783, their lowest since March 18, 2024.

Interested in more futures markets?  Explore our Market Dashboards here.