Sugar Hits 15-Month High

SUGAR

October Sugar shot higher early Tuesday to reach its highest level since May 2025. A report from Brazil’s Agriculture Ministry put Center-South sugar production at 3 million metric tons in the second half of July, -17% from the same period last year. Cane crushing was -8.4% from year ago to 46.08 million tons. Ethanol production was +2.8% to 2.39 billion liters. Cumulative sugar production since the marketing year began in April is -12.4% to 16.9 million tons. Cumulative cane crushing is +2.1% from last year. The decline in production during July contradicts ideas that drier conditions during July would have boosted crush activity. The market is still awaiting an update from UNICA. There are some ideas that the rally in sugar and the weakness in the Brazilian currency will support a greater emphasis on sugar. India is seeing record prices and is considering allowing limited duty-free sugar imports, which could take more from global supply. El Nino remains a concern for production, especially in India and Thailand.

COCOA

December Cocoa was lower early Tuesday, following Monday’s move to its highest level since August 5. The market has been in a sideways pattern for the past month and a half as it ways generally favorable growing conditions in west Africa against the possibility that the “Super El Nino” will cause problems with the upcoming crops. Ivory Coast farmers interviewed by Reuters said the below-average rainfall last week mixed with lengthy sunny spells in most of the nation’s growing regions have sparked optimism for the main crop, which runs from  September-to-February. During the last El Niño cool and excessively wet conditions in August caused problems with back pod and swollen-shoot diseases. That was followed by extremely hot and dry conditions the following winter that caused trees to drop their flowers. The possibility that the region may have made it through the first phase of El Nino without excessive moisture may ease some concerns, but the threat of hot and dry conditions later this year remain.

COFFEE

December Coffee was near unchanged early Tuesday after a brief rally on Monday that came up short of taking out last week’s highs. The Brazilian arabica harvest progress is behind year ago levels, but it is advancing. Safras & Mercado reported last week that Brazil had completed 86% of expected arabica production versus 95% at this point last year. The Brazilian real recovered slightly on Monday after falling to its lowest level against the dollar since late March on Friday, but the generally lower value of the currency may encourage farmer selling. Tight near-term supplies provide support to the market, ICE certified arabica fell 105 bags on Monday to 231,340, their lowest since December 5, 2023. Stocks have decreased every session since June 19. The Super El Nino could bring hot and dry conditions to Brazil’s coffee growing areas later this year when the 2027 crop is in its flowering and early development stage. Major robusta growing regions in Southeast Asia face a more imminent threat, particularly Indonesia, which is already experiencing drier than normal conditions.

COTTON

December Cotton was higher for the third straight session early Tuesday and reached its highest level since May 14. Dry conditions in key US growing areas are raising concerns about upcoming production, and those concerns were supported by the weekly Crop Progress report released late Monday. The report showed 38% of the US cotton crop was rated good/excellent as of August 16, down from 40% the previous week and 55% a year ago and below the five-year average for this date of 47%. Texas was 21% G/E, down from 24% last week, 48% a year ago and the five-year average of 34%. Missouri and North Carolina are in good shape relative to the average at 86% and 80% G/E respectively versus 58% and 66% on average. Oklahoma is exceptionally poor at only 7% G/E versus 42% on average.  The report also showed 14% of the US cotton crop had bolls open, which was in line with the five-year average for this date, and 74% were setting bolls versus a five-year average of 77%. The nearby Dollar Index was slightly higher early Tuesday after falling to its lowest level since June 5 on Monday, and this is supportive to cotton on ideas it will make US exports more attractively priced on the global market. It doesn’t appear that West Texas or the Delta are likely to seem much relief over the next 10 days or so.

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