Beneficial Rains in West Africa

COCOA

July Cocoa extended its selloff to a third session overnight, falling to the 50-day moving average. The fact that Mondelez International first-quarter profits came in better than Wall Street forecasts after they raised prices in suggests that cocoa demand is more resilient than expected. Mondelez said they increased prices 6.6% in the first quarter, while volumes fell 3.5%. This follows the same theme as the better-than-expected first quarter grind data for Europe, Asia and North America that was released two weeks ago. Those grind numbers were down from a year ago, but they fell only 3.0-3.7% versus expectations for declines of 5-7%. World Weather Service expects West Africa to see daily showers and thunderstorms through the next week, with all cocoa areas receiving rain at one time or another, which should be beneficial for late mid-crop production. Weather conditions have taken a turn for the better recently with the arrival of seasonal rains. ICE certified stocks increased by 7,552 bags yesterday to 1.995 million, their highest since October 14.

SUGAR

The Brazilian agricultural agency CONAB is forecasting Brazil’s 2025/26 sugar production at 45.9 million metric tons, which would be up 4% from 2024/25 and a new record. This is despite a decline in cane output, as they expect crushers to favor sugar over ethanol in their mix, citing the favorable market conditions for sugar. Cane production is expected to come in at 663.4 million tons, down 2% from 2024/25. A private research firm, Sugar Trading Academy (STA), put Brazil’s Center-South production at 38.1 million tons for 2025/26, which would be down from 40.2 million tons in 2024/25. This would be if mills were to keep the sugar/ethanol crushing balance the same as 2024/25. The UNICA report on Brazilian Center-South sugar production for the first half of April will be released today, and it will be the first official report for 2025/26. As of March 31, the final report for 2024/25, total production for the marketing year was 40.169 million metric tons, down from 42.423 million in 2023/24. Production for the second half of March totaled 201,000 tons, up from 183,000 the same period a year ago. Last year, first-half April production totaled 721,807 tons. The five-year average for the period is 599,866. Last year, production got off to a fast start because there was a lot of cane leftover in the fields from the previous season. First notice day for the expiring May contract is on Thursday, and there has been talk that there could be a large delivery from Brazil.

COTTON

Exports are the Achilles heel for the cotton market. Even though China is not the biggest buyer of US cotton, some sort of agreement or thawing over the trade situation with the US could bolster the global economy and spur textile manufacturing worldwide, which would improve US export prospects. Rain appear to be reaching everywhere it is needed in Texas. World Weather Service said a narrow band of rain fell on some southwestern parts of West Texas that had missed out on significant rain recently. However, the southern, central, and eastern parts of West Texas, the eastern Panhandle, and southwestern Oklahoma could see heavy rainfall and possibly some local flooding that could cause planting delays.

COFFEE

July Coffee traded to new contract highs yesterday but closed lower as traders appeared anxious to take profits. The market has rallied off concerns about Brazil’s 2025/26 crop, but prices at $4.00 per pound add to demand concerns that have been exacerbated by tariffs and economic uncertainty. The US imports almost all the coffee it consumes, so there is hope that it coffee will be exempted from the tariffs. Starbucks North American same-store sales fell 1% in the first quarter. Indonesia’s Sumatra robusta coffee bean exports totaled 22,771 metric tons in March versus 3,948 for the same period last year. World Weather Service says recent rains in Brazil have helped improve soil moisture in parts of the coffee production region, but there are still some shortages deep in the ground. The rain that fell during the past two days marks the end of monsoonal rain, and the dry season will begin over the next few days. Only infrequent sporadic showers are expected during the first half of May.  ICE certified stocks fell 13,693 bags yesterday to 812,611, their lowest since April 23. This is the first time stocks declined in eight sessions.

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