Global Commodities: ICE Softs: El Niño risks are materializing. We are neutral cocoa, bullish sugar, bearish coffee from current levels

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Global Commodities: ICE Softs: El Niño risks are materializing. We are neutral cocoa, bullish sugar, bearish coffee from current levels

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16 Jul 2026 13:53:05 ET │ 17 pages

Global Commodities

ICE Softs: El Niño risks are materializing. We are neutral cocoa, bullish

sugar, bearish coffee from current levels

Arkady Gevorkyan AC

CITI'S TAKE +1-212-723-1051

The US NOAA updated its projection and now expects a very strong El Niño arkady.gevorkyan@citi.com

with an 81% probability, along with a 97% likelihood that it will persist AC Maximilian J Laytonthrough spring 2027. This would make it one of the strongest events ever

observed. Anomalies in weather patterns are starting to emerge, with +44-20-7986-4556

extreme heatwaves in North America and Europe, extremely high levels of max.layton@citi.com

precipitation in Brazil, and lower-than-normal rainfall in India. As we noted AC Eric G Lee

previously, the bullish skew for ICE soft commodities is outweighed by the +1-212-723-1474uncertainty of weather patterns during an extreme El Niño. We are bullish

on sugar and have an open trade idea with a short-term target of $0.17/lb. eric.g.lee@citi.com

ACWe are now neutral on cocoa, after closing our trade idea that captured the Anthony Yuen

largest part of the run. We remain bearish on coffee and are opening a put +852-2501-2731

spread trade idea. anthony.yuen@citi.com

SUGAR - We remain tactically bullish on sugar, maintaining price targets of

$0.17/lb in 3 months and $0.19/lb in 12 months, supported by expectations of a

tighter global market. The bullish outlook is driven by higher ethanol allocation in

Brazil (and recent approval to increase anhydrous ethanol blending to 32%, Globo,

7/14/26), reduced sugar exports, potential revisions to India’s production, weaker EU