Fund Selling Hits Sugar

SUGAR

October Sugar was sharply lower early Thursday following a move to its highest level in more than two year on Wednesday. Like cotton, the sugar market may be facing some fund selling. Last week’s Commitments of Traders report showed managed money traders were net long 207,082 contracts, which was their highest since September2023 and left the market vulnerable to heavy selling if support levels are taken out. Earlier this week the International Sugar Organization forecast a global sugar deficit of 200,000 metric tons for 2026/27 versus a 1.1 million ton surplus for 2025/26. However, this was likely smaller than some had anticipated, with production declines outside Brazil being offset by a larger sugar mix expected for Brazil in 2027. They did lower their estimate for the 2025/6 surplus to 1.1 million tons from 2.2 million in their May update. The Indian Sugar & Bio-energy Manufacturers Association (ISMA) and the National Federation of Cooperative Sugar Factories (NFCSF) have jointly stated that the country will not face shortage of sugar during the upcoming festival season. They said expect India to hold a healthy closing buffer of around 3.5 million metric tons through the end of September. Record domestic prices in India had been another supportive factor, but the worst fears have not materialized.

COCOA

December Cocoa was lower for the third straight session as concerns that El Nino would cause a sharp drawdown in West African production appear to have abated. The previous El Nino event brought cool, wet weather during the late summer that cause disease problems and lowered main crop output. That was followed by an excessively hot and dry pattern the following winter that caused further damage. So far this year at least, the region has avoided the cool wet pattern, but the outlook for this winter is still up in the air. This year conditions were seasonably dry in the second half of the summer, which did raise concerns about main crop health, but the pattern appears to be changing, with World Weather Inc. saying rain amounts should increase next week for southern areas of Ivory Coast and Ghana. Daily rainfall totals will be light to moderate most often with locally heavy rain on occasion. Ghana’s state-run cocoa marketer, the Cocoa Marketing Company Ghana Ltd., did say the nation’s cocoa output is forecast to drop to 470,000-620,000 metric tons in 2026/27, which would be down 18%-38% from 760,000 tons in 2025/26, citing old trees, disease issues and failing pollination. However, the Mondelez chief cocoa officer said on Tuesday that cocoa stockpiles were ample enough to cushion any hit to global production.

COTTON

December Cotton fell to its lowest level since August 19 early Thursday, extending its selloff from Monday’s contract high into a third session. A slight improvement in US crop conditions this week may have started off the selling, which was likely exacerbated by fund selling. Last week’s Commitments of Traders Report showed managed money traders were net long 207,082 contracts, their highest since September 2023, which left the market vulnerable to heavy selling as support levels were taken out. The dollar was lower after reaching a three-week high on Wednesday which may offer some respite, as well as higher oil price. World Weather Inc. says west Texas and Oklahoma will remain hot for another week. There is some potential for showers and thunderstorms near mid-month, but the precipitation will come a little late to be of much use to this year’s crops. The Delta has also been too hot and dry recently and they do not expect a change to that pattern anytime soon. Eastern Texas and areas along the Gulf, could see some heavy rain over the next 1-5 days, but only light amounts are expected in West Texas and the mid to northern Delta. Today’s trade may turn on the weekly export sales report, with a strong number this week potentially capable of turning the market around.

COFFEE

July coffee fell to its lowest level since July 6 early Thursday as the market continued its selloff on easing concerns about Brazilian production. The selloff in prices and fact that the crop is nearing completion suggest that exports are picking up. Last week Cecafe revised its export numbers for August from -22.5% from July to +20.5%, citing a glitch in the reporting mechanism on their website. This changed the picture from a shockingly tight supply setup to closer to what had been expected earlier this summer. Cooxupe, Brazil’s largest coffee cooperative, said on Wednesday its farmers had harvested 91.9% of their 2026 crop as of August 28, up from 87.5% a week earlier, down from 94.9% at the same point last year. Vietnam government data indicated the country exported 1.33 million metric tons (22.2 million bags) of coffee in the first eight months of 2026, up 13.7% from the same period a year earlier. World Weather inc. says most computer forecast modeling suggests little to no change in Indonesia rainfall potentials for the next ten days to two weeks. El Nino still has a strong grip on the region and will limit rainfall to well below normal amounts with less frequency than usual.

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