Soft commodities include world free-market sugar, Arabica coffee, cocoa, cotton, and frozen concentrated orange juice futures traded on the Intercontinental Exchange (ICE). The soft commodities composite moved 11.06% higher in Q4 2024 and posted a 58.14% gain in 2024. Cocoa futures were the upside leader in Q4, with Arabica coffee posting an impressive gain after rising to a new record peak. FCOF rallied, while world sugar and cotton futures declined during Q4. Sugar and cotton futures also moved lower in 2024, while Arbacia coffee, cocoa, and FCOJ posted explosive gains and reached new record price peaks.
Sugar and cotton futures move lower in Q4 and 2024
World free-market sugar futures prices on ICE fell 15.04% in Q4 2024 and were 6.41% lower in 2024.
The monthly continuous futures contract chart highlights the sugar future’s rise to 28.14 cents per pound in November 2023, the highest price since October 2011. The nearby sugar futures contract has been in a bearish trend since the October 2023 high, settling at 19.26 cents per pound on December 31, 2024. Nearby sugar futures were lower in early 2025.
Cotton futures on the ICE exchange dropped 7.08% in Q4 2024. The 15.56% decline in 2024 made cotton futures the worst-performing soft commodity in the best-performing sector.
After reaching a $1.5595 per pound high in May 2022, the highest price since 2011, the continuous cotton futures contract plunged, making lower highs and lower lows, settling 2024 at 68.40 cents per pound. Cotton futures were lower in early 2025.
Sugar and cotton futures were the only two soft commodities to post losses in Q4 and 2024, as the bearish trends were their friends.
Record highs in cocoa futures, which led the sector
The cocoa futures market was another story in 2024, as adverse weather conditions and crop diseases in West Africa devastated cocoa crops, creating significant shortages. ICE cocoa futures rose 51.19% in Q4 and were a staggering 178.24% higher in 2024, the second straight year where cocoa led the softs and the commodities asset class.
The quarterly cocoa chart highlights the parabolic rally in 2023 and 2024 that took cocoa futures to a $12,931 per ton high, over two and one-half times higher than the previous 1977 $5,104 all-time peak. Cocoa futures settled 2024 at $11,675 per ton and were lower but still in record territory above $10,900 per ton in early 2025.
Coffee eclipses $3 and rises to a new record high
Cocoa was not the only soft commodity to rise to an all-time high in 2024. Adverse weather conditions and crop diseases in Brazil pushed Arabica coffee bean futures on ICE to a record high, eclipsing the 1977 $3.3750 per pound previous record peak.
The quarterly continuous Arabica coffee futures chart shows the rally that took coffee futures to a new record high of $3.4835 per pound in Q4 2024. Coffee futures rose 18.32% in Q4 and were 69.81% higher in 2024. Coffee futures rose above the $3 per pound level for the fourth time, settling at $3.1975 per pound on December 31, 2024. Coffee futures were higher in early 2025.
FCOJ also rises to a new peak
Frozen concentrated orange juice is the least liquid soft commodity with the lowest daily volume and open interest, the total number of open long and short positions in the ICE futures market. Adverse Brazilian weather and crop diseases led FCOJ to join cocoa and coffee in rising to new record highs in 2024.
FCOJ moved 7.91% higher in Q4 and 64.63% higher in 2024.
The quarterly FCOJ chart shows the parabolic rally that took the futures over the 2016 $2.2750 per pound high to over double that price at above $5 per pound. The nearby FCOJ futures settled 2024 at $4.9750 per pound and were lower at just over the $4.80 level in early 2025.
The prospects for 2025- The trend is your friend, but beware of corrective plunges
It is dangerous to step in front of a freight train moving at high speed, and three of the soft commodities were bullish trains traveling at hypersonic speeds in 2024. Commodity cyclicality suggests that production will increase, inventories will build, demand will decline, and prices will find tops in cocoa, Arabica coffee, and FCOJ futures, but it is virtually impossible to pick tops during runaway bull markets caused by weather and crop disease.
Meanwhile, Brazilian weather pushed Arabica coffee and orange prices through the roof, but it has not done the same for world sugar. Brazil is the leading producer and exporter of sugarcane. Time will tell if sugar futures join coffee, cocoa, and FCOJ on the upside in 2025.
Cotton has been a laggard since the 2022 high. Cotton tends to rally in spring as the uncertainty of the annual crop peaks. Highs tend to occur from March through July. At below 70 cents per pound, cotton could be the soft commodity that offers the most compelling value with a limited downside for 2025.
Soft commodities led the raw materials asset class in 2023 and 2024. While the odds favor a correction in 2025 because of commodity cyclicality, the sector remains a bullish freight train.
On the date of publication, Andrew Hecht did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.