Ivory Coast Cocoa Prices Cut 57%

COCOA

May Cocoa was near unchanged and trading in a narrow range early Thursday. The market is assessing the latest moves on the part of Ivory Coast to lower the farmgate prices paid to farmers. This will make it easier to sell their cocoa, and this has traders wondering if this is a chance for the market to put in a low. On Wednesday, Ivory Coast announced it had cut the fixed farmgate price paid to cocoa farmers by 57% to 1,200 CFA francs ($2.14) per kg for the mid-crop. Ivory Coast has also moved the start of the mid-crop to March 1 from April 1 in hopes of boosting sales of the stocks that would otherwise be considered main crop. A representative of Ivory Coast also said that cumulative cocoa arrivals at ports for 2025/26 (October/September) had reached 1.5 million metric tons by March 1, larger than exporters’ estimates at 1.335 million tons from Monday.

SUGAR

May Sugar was lower early Thursday, extending its retreat from Monday’s high. The market initially drew support from the sharp increase in energy prices with the outbreak of the Mideast war on ideas that this would encourage more ethanol production from cane at the expense of sugar. However, with the Strait of Hormuz effectively closed, sugar refiners in the Persian Gulf cannot access raw sugar, which is bearish for the ICE Sugar #11 contract. There are expectations the Brazil will increase ethanol production in the 2026/27 marketing year, but up to this point those notions have been primarily driven by low sugar prices. The rally in energy markets, should it hold, could change that. It also depends on the circumstances in the Mideast, and especially important is the question of how long the Strait of Hormuz will be blocked.

COFFEE

May Coffee was higher early Thursday but had yet to take out Tuesday’s two week high. On Wednesday there were reports that Brazilian traders were reluctant to sell at current levels. The Brazilian real recovered on Wednesday after a knee-jerk break on Tuesday that took it to its lowest level since January 20. A week real can encourage exports, but in this case that trend may not be long-lived. There were also suggestions that farmers in Vietnam’s Central Highlands were slowing sales as the war in the Middle East was pushing  up shipping costs. One trader told Reuters that sea freight routes from Vietnam to Europe remained unaffected but fares had at least doubled. World Weather Inc. expects a boost in precipitation in key Brazilian growing areas at the end of this week and into early next week after a period of erratic rains earlier this week. The coffee market had been pressured by good weather in Brazil, and the interruption in rain last week may have offered some support.

COTTON

May Cotton was near unchanged early Thursday and hovering near Tuesday’s two-week lows. The strong dollar, which is holding the most of the gains it made this week off the war in Iran does not encourage US export sales. The stock market holding its recovery from Tuesday’s (three-month) low but still short of the recent highs. The sharply higher crude oil prices make man-made fibers more expensive, but at this point the trade is more concerned that high energy prices will have a negative effect on the economy, which is not good for cotton demand. World Weather Inc. said south Texas and northeastern Mexico need rain to support planting this month and next. Some showers may evolve later this week into next week, but a general soaking seemed unlikely. West Texas also needs rain, and only light amounts are expected for a while. Recent rain in the southeastern US has improved soil moisture for better planting potentials later this spring.

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