Coffee Slips on Brazil Outlook

COFFEE

May coffee saw a two-day bounce at the end of last week but was back lower this early Monday, after the market seemed to struggle at the 9-day day moving average on Friday. Good weather in Brazil points to a strong 2026 crop, which will be harvested in May or June. World Weather Inc. says frequent shower and thunderstorm activity is expected in coffee areas of Brazil through Thursday. Sufficient rain will fall to maintain a very good outlook for cherry development. Some drying is expected from Parana to Sul de Minas during the coming weekend and early next week. Trump declared a new 15% across the board tariff on all countries on Saturday under a different authority from the one that was declared unconstitutional on Friday. This should not have much effect on coffee, which has already been exempted.

COTTON

May Cotton was slightly lower early Monday after a breakout rally on Friday that took the market to its highest level since January 29. A Reuters headline that Safras & Mercado was forecasting Brazil’s 2025/26 cotton output to fall by 11.5% may have lent support. Also supportive was an export sales report that put US cotton sales for the week ending February 12 at 466,253 bales for the 2025/26 (current) marketing year and 33,138 for 2026/27 for a total of 499,391. This was up from 281,894 the previous week. It was the largest for the marketing year so far and the largest for any week since October 2023. Cumulative sales for 2025/26 are still the lowest in 11 years. Sales have shown improvement recently, as they have been above 200,000 bales for the past six weeks and above 300,000 in four of those. The market saw a secondary rally on Friday in the wake of the Supreme Court decision declaring some of the Trump tariffs illegal. But that situation is in flux, with Trump declaring an across-the-board 15% tariff over the weekend, and uncertainty regarding the deals that have already been worked out with certain buyers, including Vietnam.

SUGAR

May Sugar was higher early Monday following a rally off contract lows last week. The large global surplus for 2025/26 is expected to shrink in 2026/27 but not disappear altogether. Low prices are expected to reduce beet plantings this year, lower the incentive for growers to invest in cane crops, and encourage ethanol production over sugar. India’s output may be lower than previously expected because of heavy rains that are believed to have lowered cane yields.  The US Climate Prediction Center said it expects a shift from La Niña to ENSO neutral by the Northern Hemisphere spring, and they gave a 56% chance for the neutral conditions to continue through the summer, which would forestall any threats to Thai and Indian crops from El Niño, a phenomenon that has caused lower than normal rainfall during the summer monsoons in previous years.

COCOA

May Cocoa was higher early Monday after a bounce off contract lows on Friday. The market has endured a steep selloff since early January, first due to lower-than-expected 4^th quarter grind results for Europe and Asia, and then on reports of larger amounts of newly harvested cocoa going unsold in Ghana and Ivory Coast. Buyers have resisted paying the official farmgate prices in both countries. Ghana has taken steps to bring lower prices on sales going forward, and Ivory Coast is looking at ways to do the same. The problem is that farmers have brought beans to harvest on expectations of being paid the higher prices, and neither country appears to have figured out how they will compensate the growers for the bean they have already brought to market. Ivory Coast has agreed to purchase about 100,000 metric tons, but there have been reports of much larger amounts going unsold. This has left buyers with the upper hand, with the question being when they will step in to cover their needs.

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