Choppy Ahead of Q1 Grind Data

COCOA

July Cocoa has been in a sideways pattern for four sessions after finding support at the 200-day moving average last week. The trade is looking ahead to first quarter grind data for Europe, North America, and Asia, which is due to be released on April 17. The Swiss/Belgian chocolate processor Barry Callebaut reported that sales volume fell 4.7% from year ago levels for September thru March and that they are expecting a mid-single digit percentage decrease for the full-year sales through August. A 5% year-over-year decline in 1Q grind numbers would put Europe -18,364 metric tons at 349,000, North America -5,684 at 108,000, and Asia -11,077 at 210,000. Some analyst expectations are -5% to -7%. Brazil Q1 grindings totaled 52,135 tons, -13% from in the same period in 2024, due to slower demand and low supplies. Cocoa arrivals at plants fell 5% in the quarter versus last year, to 17,758 tons. Ivory Coast farmers interviewed by Reuters said they fear that the beans maturing in time for next month’s harvest would be small and of poor quality compared to last year and warned of a shortage in supply from July to mid-August because of the dry weather this winter. They also said that rainfall has been scarce since the rainy season started this month. World Weather Service expects an erratic rainfall pattern in West Africa over the next week to ten days. Rainfall is expected to be light with a few locally moderate thunderstorms possible. However they added that the precipitation should prove beneficial to all production areas. ICE certified stocks increased 2,053 bags yesterday to 1.884 million, the highest since October 21. Stocks have increased for six straight sessions.

COFFEE

July  Coffee has managed to recover almost 50% of its decline from the February all-time highs, with an uncertain production outlook for Brazil being offset by expected declines in demand due to high prices and concerns about tariffs. Robusta has led the market for the past four sessions, as report of sharply lower robusta production out of Brazil has added to tightness concerns. Brazilian rainfall is still short of what is needed. World Weather Service said yesterday that growing areas could see some increase in rainfall today and tomorrow and possibly again Friday into Saturday. The moisture boost will be welcome, but more is needed to get soil moisture back to favorable levels before the dry season arrives. ICE certified stocks increased 2,361 bags yesterday to 786,920. Stocks increased 13,545 last week. Stocks pending review have increased 49,916 bags in the past week and have reached 85,748, their highest since February 27.

COTTON

July Cotton is near unchanged this morning after a mild selloff yesterday. The setback comes after the bounce last week when the 90-day delay in tariffs was announced. Vietnam is the biggest buyer of cotton this year, and they were facing one of the largest tariffs. They have already expressed interest in boosting imports of US LNG to narrow their trade surplus with the US. Pakistan is another big buyer, and they have reportedly expressed interest in buying  US crude oil. China is less of a player in US cotton exports this year, but the escalation of the trade conflict with that nation and an uncertain outlook for global demand weighs on cotton prices. The weekly Crop Progress report released yesterday afternoon showed 5% of the US cotton crop had been planted as of April 13 versus 4% the previous week and 8% a year ago. The five-year average for this date is 8%. Texas was 8% planted versus 6% last week and 13% a year ago. The five-year average is 13%. Georgia was 1% planted, on par with other years. World Weather Service said southeastern US crop areas and most of those in West and South Texas will be dry for the next eight days. Rain is needed to support planting next month in West Texas and in South Texas and the Texas Coastal Bend to ensure favorable soil moisture after rain fell at the end of March.

SUGAR

July Sugar extended yesterday’s losses overnight and fell to its lowest levels since February 7. Yesterday’s UNICA report was viewed as bearish because it showed Brazilian Center South sugar production for the second half of March up sharply from the first half of the month and ahead of year ago levels for the first time since October. This was the last report for the 2024/25 marketing year, but it reflected a seasonal increase that typically comes as the rainy season draws to a close. Sugar production was higher than a year ago despite the cane crush still lagging year ago levels, thanks to an increase in sucrose levels in the cane and a larger share of the crush going to sugar production relative to ethanol. The higher sucrose levels were not a surprise given the recently dry conditions. The trade will be watching Brazilian production in the months ahead, as there are concerns that the drier than normal rainy season will lead to disappointing cane yield.

Interested in more futures markets?  Explore our Market Dashboards here.