Cocoa Rallies on Price Decision

COCOA

December Cocoa was higher early Monday, extending its recent rally and reaching its highest level since last September. News that Ivory Coast and Ghana were expected to keep the fixed prices to cocoa farmers for their beans for the 2026/27 main crop season steady with last year. may have sparked concerns that growers will be less incentivized to harvest. Expectations that the start of the main crop harvest will be delayed due in part to a long mid-crop season lent support last week. There are also concerns about port congestion if exporters rush to ship beans before EU deforestation rules take effect at the end of the year.

SUGAR

October Sugar was higher early Monday but in the bottom half of Friday’s range. The market had an outside day lower on Friday by first trading to its highest level since April 2024 and then falling below the previous day’s low. The funds have moved into overbought territory, with the manage money net long reaching its highest level in more than two years. Friday’s Commitments of Traders Report showed managed money traders were net buyers of 55,732 contracts of sugar for the week ending August 25, increasing their net long to 207,082 their highest since September 2023. (The record net long is 286,248 from 2016). With the market gaining another 1.39 cents from Tuesday’s close (the date the data was collected) to Friday’s high, the net long was like even higher. In a matter of three weeks the market has gone from a modest net short to a very large net long, indicating the strength of fund buying but also a vulnerability to heavy selling if support levels are taken out. Australian analyst firm Green Pool said last week that it expected a global sugar deficit of 3.24 million metric tons for 2026/27, which is smaller than its previous forecast of 3.34 million.

COTTON

December Cotton started off Monday’s session lower but then changed course to trade to another new contract high. World Weather Inc. says West Texas is not likely to see any significant rain during the next ten days to two weeks, although there may be a few spotty showers. It’s getting a bit late in the season to help the crop anyway. On top of that, it is very hot. India is on course for its weakest monsoon in nearly two decades, with rainfall expected to end the season around 15% below the long-term average, according to two senior weather department sources, which could lower production there as well. Higher crude oil prices off a resumption of hostilities between the US and Iran offers additional support to cotton. The US drought monitor shows an area representing approximately 52% of US cotton production was experiencing drought as of August 25, up from 44% the previous week and the highest since mid-July.

COFFEE

December Coffee was higher early Monday but inside the range of the previous two sessions after a steep selloff from near contract highs last week. The market saw a quick turnaround last week when Cecafé corrected the coffee shipment data on its website. The site had been showing cumulative totals for export registrations in August running 22.5% behind July , but they later corrected the data to show export licenses were up 20.5% as of August 26, turning the outlook suddenly bearish. Nearby supplies remain tight, with ICE certified arabica stocks down 35 bags on Friday to 223,976, which near the lowest they have been since 1999. Stocks fell 4,016 bags last week. There is stilltalk of Brazil’s well-capitalized farmers facing  little pressure to sell. The International Coffee Organization said on Friday that global green coffee exports totaled 10.48 million bags in June, up 0.8% from a year ago. They credited a sharp jump in exports of the “Brazil naturals” arabica grade, which were up 7.1% to 2.76 million bags. Exports of the “Colombian milds” rose 1.2% to 1.09 million bags. Shipments of green robusta coffee, fell 2.1% in June to 3.97 million bags, only the second instance of negative growth in the first nine months of the 2025/26 season.

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