Bean Quality Concerns Extend Rally

COCOA

July Cocoa extended its rally overnight to trade to its highest level since January 29. In addition to a slowdown in Ivory Coast port arrivals last week, the market may have also found support from reports of the beans being small and of lower quality. An export company director told Reuters that most deliveries had bean-counts ranging between 130 and 150 beans per 100 grams, whereas the cocoa regulator sets the standard at 106 beans per 100 grams and tolerates up to a maximum of 120. The head of a cocoa grinding company based in San Pedro told Reuters that it was rejecting between 40% and 50% of beans received, while a director of another grinder said the company was operating at 60% of capacity. Ivory coast farmers interviewed by Reuters were optimistic that above-average rainfall last week would boost the development of pods for the final stage of the April-September mid-crop. The rainy season runs from April to mid-November, and farmers across cocoa regions said they were expecting regular rainfall until late June. Growers also said mid-crop harvesting was accelerating and the availability of well-dried beans from the bush was rising.

COTTON

US cotton plantings are still about two days behind the average pace, which is not very much but may be enough to prevent a test of the contract lows until the season moves further along. Yesterday’s Crop Progress report showed 40% of the US cotton crop was planted as of May 18, up from 28% the previous week but down from 42% a year ago. The five-year average for this date is 43%. Texas was 35% planted, up from 27% last week but below the five-year average of 38%. Georgia was 41% planted versus a five-year average of 45%. Mississippi was 31% planted, up from 25% last week but well below the five-year average of 60%. They are about 10 days behind average and the slowest of the major states. Last week’s WASDE had a similar setup to last year, with US stocks/use slightly lower but still above the five and ten year averages, which is not a particularly bullish setup. The one supportive factor may be that prices are already hovering around five-year lows. The market may also feel the need to build some sort of weather premium if plantings fall behind further.

COFFEE

A USDA Foreign Ag Service report released yesterday had Colombia’s coffee production falling in for the upcoming year, but it also had a revision higher for the current season. The report showed 2024/25 arabica production at 13.2 million bags, up from their October forecast of 12.9 million. The first estimate for 2025/26 came in at 12.5 million, and the drop was from last year was attributed to too much rain. Nicaragua’s 2024/25 production was lowered to 2.560 million bags from 2.685 million previously, and the 2025/26 output was put at 2.580 million. Brazil’s harvest appears to be running a bit behind due to rains, especially in robusta growing areas, which may have helped lift the market off the 100-day moving average after testing that line for four straight sessions.

SUGAR

July Sugar extended its losses overnight but was back near unchanged this morning. A relatively dry period in center-south Brazil so far this month could help get the 2025/26 harvest back on track after a slow start in April. At an industry meeting last week produced estimates for a 2025/26 global surplus of 400,000 to 1.53 million metric tons after a deficit of 4-5 million in 2024/25. Brazil’s production was expected to be up 4-5% from 2024/25, with India’s expected to be up 22-24% and Thailand’s up 11-14%. The Indian government last week called for an arrival date of May 28 for the annual monsoon, about a week earlier than normal, which should help the cane crop.

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