Soft commodities had a generational year in 2024. London cocoa futures roughly quadrupled from late-2023 lows on West African disease outbreak and weather damage. Arabica coffee made multi-decade highs on Brazilian frost and Vietnamese drought concerns. Sugar pulled back after 2023's peak but stayed structurally above the 2010-2020 range. The 2025 reset was partial and uneven.
What actually reset
- Cocoa pulled back roughly 35% from peaks as West African production estimates were revised less catastrophically and demand destruction from retail price hikes became visible.
- Coffee held most of its gains — supply-side narratives proved harder to dismiss than cocoa's.
- Sugar normalised closer to mid-cycle prices as Brazilian sugar production recovered.
What stayed elevated
Cost-base for downstream consumer brands. Nestlé, Mondelez, Starbucks all referenced the input-cost step-change in 2025 earnings. Some pricing has stuck (cocoa pass-through to chocolate retail), some hasn't (coffee retail pricing was already at a level that resisted full pass-through). The producer-end has captured a larger share of the value chain than at any point in the previous decade.
Trading implications
Softs are not part of most retail traders' instrument lists. Where they are accessible (via ETFs, CFDs at some brokers, or futures), they offer return distributions that are largely uncorrelated to the equity-FX-gold axis. The trade-off is liquidity: spreads on softs can be wide and weekend gap risk is real. Position sizing needs to reflect that, not just the daily ATR.