Malaysia Q2 Grind Drops 22% YoY

COCOA

The Malaysian Cocoa Board and Cocoa Manufacturers Group reported yesterday that the nation’s cocoa bean grind fell 22% year on year in the second quarter. They are Asia’s second-biggest cocoa processor, and this news is being viewed as an indicator that the second quarter grind numbers for Asia, which are due out tomorrow, will show a significant decline. Q2 grind data for Europe and North America are also expected out tomorrow. The question on traders’ minds is the degree to which demand has been pressured by high prices. The first quarter numbers showed Europe’s grind was down 3.7% from a year earlier, with Asia’s down 3.4% and North America’s down 3.0%. Ghana’s cocoa regulator, COCOBOD said yesterday that increased disease caused by prolonged rainfall and not enough sunlight could lead to a moderate production decline for 2025/26. An association of Ghanaian farmers warned last week that cooler temperatures, excessive rainfall and not enough sunlight had reduced yields and raised the risk of fungal diseases including black pod disease. COCOBOD said it had intensified mass spraying and disease control programs. Growers in Ivory Coast and Ghana told Bloomberg that conditions were good, but those in Cameroon and Nigeria complained of cold weather and/or too much rain. The overnight maps showed that rains over the last 24 hours stayed north of the cocoa growing areas of Ivory Coast and Ghana, but they did reach some producing regions of Nigeria and Cameroon. World Weather Service says the dry weather will support the mid-crop harvest and allow increased plantation activity.

COTTON

December Cotton was inside yesterday’s range-up action overnight. US crop prospects are good, and the demand picture is questionable, but the three-month consolidation continues, and the April low still looks solid. World Weather Service expects a much drier and eventually warmer weather pattern through the next two weeks for West Texas, which would allow crop development rates to increase while soil moisture in place supports the needs of most cotton into the last days of the month. However, they added that the region will need more rain soon. US crop conditions, especially Texas are running ahead of average for this time of year, but some traders have expressed concern about the drier trend that has developed over the past week. The NWS 6-10 and 8-14 day forecasts show much above normal temperatures across the US cotton areas, with below normal precipitation for much of Texas. This may present the first opportunity for a drought-related rally this season. As of last week, only 3% of US cotton production was in an area experiencing drought. Indonesia and the US have reached a trade deal that would lower the proposed tariffs on Indonesian imports to 19% from the threatened 32%. This could affect textile exports into the US, which could lower their cotton import needs.

COFFEE

Reuters reported that cash coffee traders were racing to get as much Brazilian coffee as possible into the United States before the 50% tariff is implemented on August 1, by diverting ships to US ports mid-journey and moving stock from Canada and Mexico. US-based importers are already posting wholesale listing prices that include the 50% tariff for any shipment arriving after August 1. Cooxupe, Brazil’s largest coffee co-operative, said yesterday that its farmers had harvested 49.3% of the expected 2025 crop as of July 11, up from 40.4% in the previous week but below the 59.6% reported at the same time last year. World Weather Service says expected dry and warm weather to continue in Brazil over the next 10 days, which should support harvest progress.

SUGAR

The sugar market received some bullish news from Brazilian production this week, but so far the market’s reaction has been muted. Cumulative Brazil center-south production as of July 1 has reached 12.249 million tons versus 14.285 million at this point last year, a 14.25% decline. Dry conditions in Brazil over the past couple of weeks should benefit harvest and crushing activity for July. Brazilian harvest has a tendency to peak for the year during the second half of the month. Pakistan has revised its import tender down to 50,000 metric tons from 300,000 announced earlier, which takes away a bullish demand factor that had shown up earlier in the week. World Weather Service says southern India will see a mix of rain and sunshine during the coming week which may allow some improvement in their moisture deficits. More will be needed, however. Thailand has been drying out recently, and this trend will continue for a little while longer before there is opportunity for rain to resume. Some crop stress is expected, but the situation is not critical and timely rain is predicted for the weekend and next week.

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