Favorable Growing Conditions

COCOA

July Cocoa was higher early Monday after finding support on Friday at the 50-day moving average as well as the 0.618 retracement of rally from the March 2 contract low to the May 11 high. Ivory Coast farmers interviewed by Reuters said that rains were more intense last week than previous week (even if they were scarcer), which they said were sufficient to boost the last stage of the mid-crop. They added that said their warehouses were receiving more beans from the bush and that many pods were almost ripe to be harvested in June. World Weather, Inc. said overnight that soil conditions are still rated well due to previous rain, although recent rainfall has been lighter and more sporadic than usual. Rain and thunderstorms are expected periodically throughout cocoa areas from Ivory Coast to Cameroon and Nigeria. All areas will eventually be impacted.

COFFEE

July Coffee managed to bounce off overnight lows and rally back to unchanged early Tuesday. Reports that Brazil’s harvest is behind normal with additional heavy rainfall in some growing areas over the weekend threatening to delay harvest further may have lifter the market off its lows. Safras & Mercado said on Friday that Brazil’s coffee harvest for the 2026/27 crop reached 9% of the planted area as of May 20 versus 13% at this point last year and a five-year average of 14% for the period. They blamed humidity and slower crop maturation for the slow progress. The arabica harvest was 7% complete versus 9% last year. The robusta harvest was 13% complete versus 20% last year. World Weather Inc. said growing areas in Brazil’s northern Parana and southwestern Sao Paulo regions saw heavy rains over the weekend and that more showers and thunderstorms in the coming week could induce poor drying and maturation conditions, possibly resulting in some harvest delay. Northeastern Sao Paulo and Sul de Minas may see some impact as well, but they do not expect it to be to any great degree.

SUGAR

July Sugar gapped lower early Tuesday and fell to its lowest level since May 7 in line with a decline in crude oil in the wake of President Trump’s announcements over the weekend that a peace deal with Iran was close. The market has seen support in from time to time by expectations that high energy prices will inspires more ethanol production at the expense of sugar, as well as uncertainty over the upcoming crops because of El Nino. News that Brazil’s energy policy council CNPE is expected to approve raising the mandatory ethanol blend in gasoline to 32% from 30% came as no surprise, as there have been numerous reports of Brazil planning to do so over the past few months. We expect the UNICA report on Brazil center-south sugar production any day. For the report, an S&P Global Commodity Insights survey of 12 analysts showed an average expectation for sugar production for the period at 1.48 million metric tons, which would be up from 859,000 from the same time last year. Cane crushing is expected to be around 36.61 million tons versus 17.96 million last year. Dry conditions in April are viewed as ideal for harvest and crushing, thus boosting sugar production despite an expected reduction in sugar’s share of the overall crush.

COTTON

July Cotton found support on Friday just above the 50% retracement of the move from the contract low in February to the contract high this month, and it held that level again early Tuesday. The weather forecast looks more bearish this morning than it did at the end of last week, especially with West Texas expected more rain. World Weather Inc. said recent rain from West Texas to the Carolinas, Georgia, northern Florida and South Texas has improved crop and field conditions. Additional moisture is expected in West Texas during the next ten days that will bolster soil moisture for much improved planting, emergence and establishment conditions. Crop improvements are also occurring in the southeastern states with more rain expected. Less heavy rain in the Delta this week will help protect cotton against possible flood damage that might have occurred if it was as wet as advertised Friday. There are also expectations that the 24-cent rally from the February low to this month’s high attracted more plantings than were indicated in the March intentions report.

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