Sugar Traded Above 200-Day Moving Ave

COCOA

December Cocoa traded to its highest level since August 28 overnight. The market has broken out of its seven-session consolidation to the upside. There have been some scattered showers in Ivory Coast and Ghana this week, with the heavies rains in the north. Periodic showers and thunderstorms are expected during the next week. The rainfall is welcome after the drier than normal conditions in August and early September. A mixture of rain and sun is ideal. The trade is waiting for the west African main crop to come in; the new marketing year begins on October 1. The question is whether the crop will be big enough to turn the production deficit of the past three years into a surplus. Weather conditions have been decent this year.

COFFEE

December Coffee was lower overnight as the market consolidated Monday’s move to new contract highs. Rabobank noted in a report that the 2025/26 Brazil arabica crop was “hanging by a thread.” Rainfall in arabica regions has been consistently below normal since the start of the dry season in April. The bank has forecasted that the global coffee market would shift from a balance to a small surplus of 1.3 million bags in 2024/25. EU is reportedly taking in more bags to beat the deforestation implementation date at the end of this year. The International Coffee Organization has sent a request that the implementation date be postponed. Under the rule, sellers of coffee (and other commodities, including cocoa) would be need to prove that their products did not come from areas where forests had not been cut down in recent years. Not much precipitation is expected in key coffee areas of Brazil for the remainder of this week, and any rainfall would likely be too light to induce flowering. Conditions may not change much during the weekend or next week, but there will be some increase in the number and frequency of showers as the rainy season approaches. Greater rainfall is possible in the last days of September or early October. In Vietnam, Central Highlands coffee areas to the north into northern Vietnam should see enough rain to maintain very good cherry development in the next week. Indonesia will see less than usual rainfall over the next week to ten days, and dryness concerns will continue in central and southern Sumatra and Java. ICE arabica stocks increased by 2,913 bags yesterday to 853,802 after falling 7,600 over the previous two days. The amount pending review is down to 14,950 from 56,471 six sessions ago, and they are the lowest since July 18.

COTTON

December Cotton is a bit higher this morning but inside yesterday’s range. The market sold off yesterday, as technical traders were likely disappointed that it failed to follow through on Monday’s breakout rally. It did draw some support on the Fed’s decision to cut rates by 0.5%, which was at the high side of expectations. The dollar rallied overnight, perhaps “selling the fact,” but it is back near unchanged this morning. It fell to its lowest level since 2023 yesterday, which helps improve US cotton’s competitiveness on the global market. The bulls would welcome a strong export sales report this morning. Last week’s report showed net sales of 116,052 bales for the week ending September 5. Sales have been disappointing to say the least. As of last week, cumulative sales for 2024/25 had reached only 4.015 million bales, the slowest pace since 2016/17, and they were just 43% of the USDA forecast for the marketing year versus a five-year average of 55% for this point in the season. China had committed to 461,800 bales for 2024/25 versus 1.599 million at this point last year and a five-year average of 1.902 million. China’s cotton crop is reportedly in good shape. World Weather Service expected west Texas to receive some welcome showers over the next week, which may benefit recent cotton boll setting. The Delta is expected to be dry for the coming week, which will be welcome after the heavy rain from Hurricane Francine.

SUGAR

March Sugar is near unchanged this morning and is holding in the upper end of yesterday’s breakout range. The market traded above the 200-day moving average for the first time since February this week, and this sparked a wave of technical buying. The diminishing outlook for Brazil’s Center South production has been the key fundamental factor. The dry conditions and the possibility of a drop in their production have been known for some time, but recent reports have accelerated the concerns. Yesterday, data from the sugarcane firm CTC indicated that yields for the 2024/25 sugar cane crop were down 7.4% from last year through the end of August. They said a deficit of more than 1,000 mm (3.3 feet) of rain was recorded as of that date. A survey showed that 400,000 hectares (988,420 acres) of cane fields were affected by fires, which would amount to about 5% of the cane growing area. The rainy season should arrive in the next few weeks, which could start to bring some relief.

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