Outlook for Commodities in the Second Half of 2026: Outlook for Sugar, Cocoa, Grains, and Coffee

The second half of 2026 has been marked by a combination of climatic, geopolitical, and demand-related factors that continue to shape global commodity markets.

In Hedgepoint’s latest Outlook, highlights include the increasing climate risk associated with El Niño, changes in global trade flows, and significant adjustments in the supply-and-demand balances across various agricultural supply chains. Below, we present an overview of the key outlooks for cocoa, grains, sugar, and coffee.

Read the detailed analyses of each of the pillars discussed in this article:

• Cocoa: Demand Shows Signs of Recovery, but Risks Remain
• Grains: Demand continues to support soybeans and corn
• Sugar: Tighter market, but Brazil limits more significant price increases
• Coffee: Short-term surplus, but the market is monitoring risks for 2027/28
• Overview
• How to Stay Updated on the Commodities Market in 2026?

Cocoa: Demand Shows Signs of Recovery, but Risks Remain

The cocoa market saw prices recover throughout July, driven by a weakening U.S. dollar, increased volatility following holidays, and expectations of a more intense El Niño. Recent demand data also helped support prices.

One of the sector’s key highlights is the gradual recovery of global demand. After a period of decline, grinding activity showed positive signs in the major consuming regions. Grinding increased by 4.6% in Europe, 25.1% in Asia, and 7.7% in North America, indicating a recovery in consumption and shifts in trade flows.

These changes are also evident in international trade. Malaysia significantly increased its cocoa paste exports, with growth of 139% between October 2025 and April 2026, while Indonesia maintained cocoa powder exports above the previous season’s levels, driven by Asian demand, particularly from India and China.

In Europe, the increase in net imports of cocoa butter and cocoa powder from Côte d’Ivoire suggests significant changes in the dynamics of the processing industry. In the United States, imports of cocoa paste and cocoa butter grew by 15.7% and 14.3%, respectively, reinforcing signs of stronger demand.

On the supply side, Hedgepoint revised its forecast for Côte d’Ivoire’s 2025/26 crop upward, raising the estimate to 1.926 million metric tons following improved weather conditions and a 20.8% increase in port deliveries. For 2026/27, however, the outlook is more cautious due to below-average fruit set and risks associated with El Niño.

In Ghana, excessive rainfall may impact the start of the next season, leading to an expected 8% drop in production in 2026/27. Nigeria and Cameroon, in turn, are expected to produce approximately 290,000 and 285,000 metric tons, respectively.

Globally, Hedgepoint projects a surplus of 325,000 metric tons in 2025/26 and 111,000 metric tons in 2026/27. Despite this, the market remains attentive to developments regarding the EUDR, a European regulation that could temporarily restrict the volume of cocoa eligible for import and drive up costs throughout the supply chain.

Grains: Demand continues to support soybeans and corn

The grain market continues to closely monitor trade relations between the United States and China. The resumption of Chinese purchases of U.S. soybeans and expectations surrounding the meeting between Donald Trump and Xi Jinping in September are sustaining market interest in the oilseed. The agreement calls for purchases of approximately 25 million metric tons of soybeans per year over the next three years.

In the United States, the USDA has raised its estimate for planted acreage and projects record soybean production in 2026/27, reaching 123 million metric tons. Even with the increase in supply, exports and crush volumes are expected to continue rising, keeping stocks relatively tight.

Soybean processing remains strong, driven primarily by demand for biodiesel oil. The share of oil in the crush margin remains high, stimulating industrial activity.

For corn, U.S. production is expected to decline from the record 2025/26 crop, but could still represent the second-largest harvest in U.S. history, at 406.7 million metric tons. Strong international demand continues to support exports.

In Brazil, soybean production is expected to reach 181.7 million metric tons in 2026/27. Expansion of planted acreage is likely to be limited by tighter profit margins for producers, while weather conditions are taking center stage as El Niño intensifies.

The climate phenomenon is already considered one of the main risk factors for the upcoming South American harvest. According to the report, a strong to very strong El Niño is expected between September and January, potentially bringing drier conditions to much of Brazil and wetter conditions to the southern part of the continent.

For Brazilian corn, domestic demand remains the key factor. Growth in the corn ethanol industry continues to accelerate and is expected to add approximately 5.5 million metric tons to consumption in 2025/26. The adoption of E30 and, subsequently, E32 reinforces this structural trend of rising demand.

In summary, the factors supporting prices continue to center on strong international demand, biodiesel growth in the U.S., and the expansion of corn-based ethanol in Brazil, while El Niño increases uncertainties for the upcoming South American harvest.

Sugar: a tighter market, but Brazil limits more significant price increases

The global sugar market underwent a significant shift throughout 2026. Increased competitiveness of hydrated ethanol in Brazil’s Center-South region reduced the share of crops allocated to sugar production, while additional rainfall affected sugarcane crushing and ATR content in some regions.

At the same time, the strengthening of El Niño increased the risk of production losses in the Northern Hemisphere, especially in countries such as India, Thailand, Mexico, and parts of Central America.

Despite this tighter outlook, the situation differs from previous cycles of sharp price increases. Brazil continues to show solid performance, limiting more aggressive upward movements in international prices.

Hedgepoint’s projections indicate a sugarcane harvest of 635.5 million metric tons in the Center-South region in 2026/27, with sugar production nearing 39.9 million metric tons. For 2027/28, preliminary estimates point to more than 650 million metric tons of sugarcane and a potential sugar production of 43 million metric tons.

The report highlights that the main bullish factor at present is related to climate risks in the Northern Hemisphere and the potential impacts of a super El Niño. The probability of a very strong event occurring exceeds 75% between August and November 2026.

Even so, Brazil remains the main stabilizing factor in the global market. Increased sugar availability in the Center-South region tends to offset some of the problems observed in other producing regions, preventing more severe deficits in global trade flows.

Coffee: Short-Term Surplus, but the Market Is Monitoring Risks for 2027/28

Hedgepoint maintained its estimate for Brazilian coffee production, projecting a record harvest of 75.8 million bags in 2026/27. This performance will be driven primarily by the recovery in Arabica production and the continued robust supply of Conilon.

Although rains affected the quality of some Arabica beans during the harvest, volumes remained in line with expectations. The increased supply is expected to allow for higher exports throughout the season.

For Conilon, despite a decline from the previous record, the expansion of the cultivated area and favorable weather conditions continue to ensure high production. In addition, more competitive prices are boosting domestic demand for this variety.

Outside Brazil, the market is closely monitoring weather conditions in key producing regions. In Vietnam, rainfall improved in mid-2026, but the drier conditions recorded at the beginning of the growing season still raise questions about production potential. Meanwhile, in Central America and Colombia, the erratic weather patterns associated with El Niño require constant monitoring.

Another factor of concern was the earthquakes that occurred in Colombia and Indonesia. In Colombia, the damage affected infrastructure and logistics, impacting major coffee-growing regions and increasing market volatility. In Indonesia, the impacts on coffee production were considered limited.

Globally, Hedgepoint projects a surplus of approximately 8.9 million bags in 2026/27. However, low inventories in consuming countries and the risks associated with El Niño keep the market sensitive to any changes in fundamentals.

Overview

The outlook for the second half of 2026 shows a commodities market heavily influenced by climate forecasts. The potential intensification of El Niño emerges as the main risk factor for sugar, cocoa, grains, and coffee, while demand continues to play a key role in supporting prices.

At the same time, Brazil remains in the spotlight—whether as the main stabilizer of global sugar supply, a key player in the expansion of soybeans and corn, or the source of a record coffee harvest.

How can you stay up to date on the commodities market in 2026?

For commodity markets, the outlook for 2026 combines a relatively comfortable supply situation in some agricultural supply chains, a gradual recovery in demand in certain segments, and growing climate risks associated with the strengthening of El Niño.

At the same time, geopolitical tensions, shifts in global trade flows, and macroeconomic uncertainties continue to drive market volatility, underscoring the importance of constant monitoring and reliable information to support decision-making and risk management.

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