Sugar Holds Near Contract Highs

SUGAR

March Sugar was lower early Monday but inside Friday’s range and inside the consolidation pattern of the past couple of weeks. The market reached a new contract high last week and has more or less held those gains. Friday’s Commitments of Traders Report showed managed money traders were net buyers of 4,477 contracts of sugar for the week ending October 13, increasing their net long to 261,841, which is getting ever closer to the 286,248 from 2016. This points to an overbought condition and may make buyers hesitant until there is another piece of dramatic bullish news. Over the weekend the Indian government halted the diversion of sugar-based feedstocks for ethanol in 2026/27, as they continued their attempts to increase domestic sugar supply. This may not be a surprise, but it may add more concern about the condition of the cane crop after their El Nino-reduced monsoon rainfall this year.

COFFEE

December Coffee reached its highest level since September 1 early Monday and backed off from that level. ICE certified stocks remain near 26-year lows despite what had appeared to be a strong export pace out of Brazil. Brazil growers may be hesitant to commit ahead of the upcoming Presidential election runoff, especially with their currency, the real, rallying sharply when the conservative candidate performed well in the general election earlier this month. The strong real reduces the incentive to price for export, though it has fallen from its highs two weeks ago. ICE stocks fell another 1,791 bags on Friday to 240,767, and they were down 11,239 bags last week. The 26-year low was 217,646 bags on September 15. There are apparently concerns that supplies will remain tight into the December contract delivery. Growers in Vietnam expect the 2026/27 harvest, which is just getting started, with be close to last year. There are some concerns that the 2027/28 crop could see less water available for irrigation due to El Nino.  World Weather Inc. said parts of Vietnam continue to dry down a little earlier than usual and that drought continues in southern Indonesia with not much potential for a change anytime soon.

COCOA

December Cocoa was lower early Monday as the market continue to set back following supportive grind data last week that showed increases in Europe and Asia and a slight decline in North America. In addition, Ivory Coast grind was up 40.3% from the same period last year. ICE cocoa stocks point to ample supply. They increased by 5,931 bags on Friday to 3.594 million, the highest since May 31, 2024. Ivory Coast cocoa arrivals totaled 37,000 metric tons for the week ending October 18, down from 84,000 tons for the same week last year. Cumulative arrivals since the marketing year began in September has reached 114,500 tons, down from 132,000 a year ago and a five-year average of 195,200. This lower arrivals rate is happening despite the fact that the marketing year began one month earlier than usual this year. The numbers are traders’ estimates; official data from the CCC for 2025/26 were revised higher in June. World Weather Inc. has a mixed forecast for Ivory Coast and Ghana, though some rains are falling. They noted an erratic pattern continuing over the weekend, and they expect be sporadic rainfall over the coming week. Some areas may experience net drying, but nearly all plantations will see rain at one time or another.

COTTON

December Cotton was slightly higher early Monday but inside the range of the previous two sessions. Dry conditions in US cotton areas over the weekend should help harvest advance after interruptions from heavy rains in recent weeks, and this could increase harvest pressure. Friday’s export sales report was not very impressive, with net sales for the week ending October 8 at 146,892 bales for the 2026/27 (current) marketing year and 7,182 for 2027/28 for a total of 154,074.  This was down from 221,128 the previous week and the lowest since September 10. Cumulative sales for 2027/28 have reached 5.249 million bales, which is up from 4.571 million at this time last year but still below the five-year average of 6.288 million.  Sales have reached 45% of the USDA forecast versus a five-year average of 54% for this point in the marketing year, which suggests the USDA will eventually lower its export forecast if this pattern does not change. An outside reversal lower from 18-month highs in the nearby Dollar Index last week may turn traders more bullish on ideas it that a turn lower will improve US export prospects.

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