Cocoa Hits Multi-Month Low

COCOA

December Cocoa was higher early Wednesday following a selloff on Tuesday that took the market to its lowest level since October 2024. The market was pressured by the strong pace of Ivory Coast arrivals last, which have come in above 100,000 metric tons for three straight weeks. Nearby cocoa has reached its lowest level since January 2024. A representative of Ecuador’s National Cocoa Exporters Association told Reuters on Tuesday that they expect their nation to export more than 623,000 metric tons of cocoa in 2026. By  the end of October, exports had reached 462,351 tons for the calendar year, and the group expects them to eventually climb above 570,000 tons for the year. Ecuador is expected to pass Ghana in 2026 and become the world’s second largest producer. The EU is expected to formally announce a delay to its law banning the imports of commodities and related products linked to deforestation by another year. World Weather Inc. says West Africa’s rainy season is slowly winding down. Showers will continue mostly near the coast over the next ten days while net drying occurs farther inland. As the dry season approaches, growers will start fretting over the Harmattan Winds that come down from the Sahara, which if too strong can damage tree health and lower production expectations for the mid-crop and next year’s main crop.

COFFEE

December Coffee is a little lower early Wednesday but was inside Tuesday’s range-up action. The market has staged an impressive recovery off last Friday’s low, which  came in the wake of the announcement that the US was ending the tariffs on Brazilian coffee imports. Ideas that world supply remains tight lends support, but whether this is enough to take the market to new all-time highs remains in question. The key is how resilient consumption is in the face of higher prices. As a point of reference, a sharp drop in cocoa grind readings helped initiate a sharp selloff in that market. Cocoa production is bouncing back, but coffee supplies could be tight well into 2026. J.M. Smucker (Folgers) forecast annual profits below analysts’ estimates due to high coffee costs. The upcoming Brazilian coffee crop looks to be in good shape, but harvest is not until next spring. In the meantime, dealers told Reuters on Tuesday that Brazilian growers are holding off sales. That may start to change now that the tariffs have been lifted. The rains in Vietnam may have abated, but a low pressure system is approaching Indonesia that could cause problems with their (mostly robusta) crop. At this point, World Weather Inc. sees the threat of damage primarily to personal property and not to agriculture.

SUGAR

March Sugar edged higher early Wednesday and was approaching the “double top” at 15.05 from November 14 and 19. The UNICA report on Brazilian center south production for the first half of November is expected to be released later this week or early next, and trade expectations call for a strong harvest/crushing pace for the period. A survey of analysts by S&P Global calls for the cane crush to come in around 18.85 million metric tons, which would be up from 16.41 million from the same period last year (+14.9%). Sugar production is expected at 1.075 million tons, up from 904,000 a year ago (+18.9%), and ethanol production at 1.371 billion liters, up from 1.082 billion last year (+26.7%). Sugar’s share of crush is expected to fall to 41.94% from 43.14% a year ago. If the expectations prove true, it would put cumulative sugar production for 2025/26 up 2% from a year ago. Britain’s health department announced on Tuesday that it will end the sugar-tax exemption for pre-packaged milk-based drinks, including bottled milkshakes and milky coffees, as part of efforts to curb an “obesity epidemic,” however the exemption is not expected to end until January 2028. World Weather Service says center south Brazil will experience more routine rainfall during the next two weeks with most crops eventually impacted with greater rainfall  This could bring at least a short term improvement in soil and crop conditions but slow harvest, which is usually wrapping up by mid-December. Heavy rains that recently hit southern Thailand could be heading to cane growing areas of Sumatra, Indonesia. However, damage to agriculture is expected to be limited, according to World Weather, Inc.

COTTON

March Cotton has spent two and a half sessions consolidating after bouncing off contract lows on Friday. The trade may have been a little disappointed with the USDA export sales report yesterday (Tuesday), as it was down from the previous two weeks, but it was not enough to induce panic, given that the data was six weeks old. The next update will be this Friday, and it will cover the week ending October 16, as USDA works to catch up after the government shutdown. Tuesday’s report showed net sales of 157,636 bales for the week ending October 9. This was down from 198,985 the previous week and 198,985 the week before that. Cumulative sales for 2025/26 have reached 4.571 million bales, down from 5.144 million at this time last year and still the lowest since 2015/16. Sales have reached 41% of the USDA forecast versus a five-year average of 56% for this point in the marketing year. The largest buyer was Vietnam at 81,536 bales, followed by China at 16,695, Pakistan at 16,395, India at 11,913, and Guatemala at 11,856. Vietnam remains by far the biggest buyer so far for 2025/26 at 1.241 million bales, followed by Pakistan at 518,900. India is 7^th at 242,000 and China 12^th at 119,900.

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