Coffee Retailers Facing Price Shocks?

COFFEE

May Coffee closed below the 50-day moving average for the first time since November yesterday, and traders will be watching that line carefully today to see if it sparks additional, heavy selling. The weather in Brazil still leans bullish, as recent rain has not been enough to change the dry pattern. Industry sources told Reuters that Lavazza, Illy, Nestle and JDE Peet’s are currently in talks with retailers about passing on costs from higher prices over the past year. Given that the futures are double what they were from a year ago, retail consumers could be in for a shock. World Weather Service says that rainfall is expected to be lighter and more sporadic than usual in Brazil coffee areas through the next week to ten days, with less coverage and intensity through the first seven days in April. Totally dry weather is unlikely, but most of the rain that does fall will be brief and light and have a low impact on the overall condition of crops. ICE certified arabica stocks fell 5,996 bags yesterday to 777,817. Stocks levels are up 109 bags so far this week.

SUGAR

May Sugar has found support at the 100-day moving average, which it fell right to yesterday. The market was pressured early by forecasts for heavy rains in Brazil’s main production areas, but then Czarnikow cut its Brazil 2025/26 sugar production estimate to 42 million metric tons, down from 43.6 million estimated in February, and that may have instigated a bounce off the low. The UNICA report offered few surprises, as it showed Brazilian center-south sugar production increasing during the first half of March but still behand a year ago. Production tends to gradually increase this time of year as the new season gets underway. The 2025/26 crop year officially begins April 1, and the trade will be watching the next few UNICA reports to see how the new crop is faring. Dry weather in India may favor sugarcane harvesting, and in Thailand wet weather may delay harvest.

COCOA

May Cocoa continues to consolidate in a narrow range, having found support at the 200-day moving average this week. Prospects of a 40% decline in Ivory Coast mid-crop production this year is offset by fears that prices have reached a high enough level to shut off demand. Quarterly grind data for Europe, North America, and Asia will be released on April 17. West Africa has received beneficial rains that could help the crop later in the season. ICE certified cocoa stocks increased 9,296 bags yesterday to 1.800 million, which is the highest since October 28. Stocks have increased by 15,006 bags this week.

COTTON

May Cotton pushed up against the 50-day moving average for the third time in five weeks yesterday, which indicates that bulls are persistent. Yesterday’s export sales report may have been disappointing from the sales perspective, but shipments were the second highest for the marketing year. China canceled sales for the third straight week. For the USDA plantings report on Monday, analysts’ poll averages range from slightly above to slightly below the USDA Outlook Forum numbers in February. The Bloomberg survey shows an average trade expectation of 9.9 million acres (range 8.8-10.5 million) versus 10.0 million in the Outlook Forum and 11.2 million in 2024. The Reuters poll has an average guess of 10.189 million acres (range 9.85-10.5). Some traders had suggested that plantings would be lower with prices having fallen to new four-year lows earlier this month. The weekly Drought Monitor showed approximately 26% of the US cotton crop was in an area experiencing drought as of Tuesday, an improvement from 33% the previous week, thanks largely to an a reduction in drought areas in West Texas. South Texas saw heavy rains Wednesday night and all day Thursday, which they sorely needed.

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