Malaysia Grind Surprises Higher

COCOA

July Cocoa was near unchanged early Wednesday after breaking out above a two-month consolidation pattern on Tuesday. A report from the Malaysian Cocoa Board and Cocoa Manufacturers Group that Malaysia’s first-quarter grindings were up about 9% year-over-year boosted expectations for Asia first quarter grindings, which are due to be released along with European and North American numbers on April 16. A Bloomberg survey of traders and analysts has European grindings expected to be down 6% from last year. The survey also had Asia’s grind to be its lowest in eight years, but the Malaysia number suggest an alternative outcome. North America’s grind is expected to be lower as well.

COFFEE

July Coffee was near unchanged early Wednesday and inside Tuesday’s range. The market is holding its uptrend off the April 8 low but has yet to take out Monday’s two-week high. Safras & Mercado has revised Brazil’s 2026/27 coffee crop up 75.65 million bags, up 4.65 million from their previous forecast and 17% above 2025/26, crediting good rains and milder temperatures. Arabica production was forecast at 49.95 million bags, +29% from 2025/26 and robusta at 25.7 million bags, -1.2%. They also reported that new crop farmer sales had reached only 14% of the expected production versus 23% for this time of the year.

COTTON

July Cotton extended its rally on Tuesday to reach its highest level since June 2024, and the December contract reached its highest level since April of that year. Any rains reaching key growing areas of the US still appear to be coming up short of what is needed. World Weather Inc. says south Texas and northeastern Mexico showers have not been very great and the precipitation may continue erratic and light for a while, leaving dryland fields with a stronger need for significant rain. West Texas (especially the high Plains region) may get a few showers in the next two weeks but not enough to counter evaporation, and dryness concerns will remain. They added that rain chances should improve later this month and especially in May. Delta precipitation will continue lighter than usual, but some timely rain is expected later this month that should support recently planted and emerged crops. Drought is becoming more serious in the southeastern corner of the nation from northern Florida and Alabama to Virginia and little relief is expected for the next ten days in southern portions of that region.

SUGAR

July Sugar bounced off a five-week low on Tuesday but was back under pressure early Wednesday. Despite expectations for high gasoline prices to put boost ethanol production from cane (leaving less for sugar output) the sugar market has been under steady pressure since putting in at six-month high in March. Traders have lowered their expectations for 2026/27 production, but current supplies are still viewed as ample. The arrival of El Nino later this year may lower expectations for upcoming production further. Already the India Meteorological department said is forecasting a below average monsoon at 92% of the long-period average. Brazil is expected to raise the legal mix of anhydrous ethanol blended with gasoline from 30% to 32% for the upcoming season. Safras & Mercado estimates the proportion of cane used to make ethanol rather than sugar would rise to 54%, up from 53% in its previous forecast and 51% from 2025/26, thus reducing sugar output.

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