India Signals Sugar Surplus for 2025/26 Exports

SUGAR

The UNICA report covering Brazilian Center-South sugar production for the second half of August will probably be released early next week, as there has been no indication that it will be released today. A survey conducted by S&P Global calls for production to come in at 3.8 million tons, which would be up 17.3% from a year ago. As of August 16, cumulative sugar production for 2025/26 was down 4.7% from 2024 versus being down 9.2% on July 16 and down 14.7% on June 16. If today’s number comes in at expectations, it would put cumulative production at down 2.2% from a year ago. The Indonesian Trade Minister announced that the nation halted the issuance of raw sugar import permits for the rest of the year after sugarcane farmers complained about the difficulties of competing with imports. Indonesia has issued permits to import 4.19 million metric tons out of a total quota of 4.39 million. They are one of the world’s largest sugar importers. A senior government official in India said his nation will have enough surplus sugar supply to allow exports in the 2025/26 season beginning October 1, but he did not give an indication of the quantity. The Indian Sugar and Bio-Energy Manufacturers Association (ISMA) has asked the government to allow local millers to export 2 million tons. India allowed 1 million metric tons to be exported in the 2024/25 marketing year despite a drop in production. ISMA is estimating sugar production would increase to 34.9 million metric tons in 2025/26, but that includes a portion that will be diverted to make ethanol. Production after the diversion of some volume to produce ethanol was seen at almost 30 million tons, which is steady with their July estimate and would be up from 26.1 million in 2024/25.  They see domestic sugar consumption to come in at 28.5-29 million metric in 2025/26 versus 28 million this year.

COTTON

December Cotton is lower this morning, as it chops around ahead of the USDA supply demand and crop production reports later this morning. The trade is looking for a modest increase in US production and ending stocks. A Bloomberg poll has an average expectation for US 2025/26 cotton production at 13.54 million bales (range 13.00-14.25 million), which would be up from 13.20 million in the August update. Sales have reached 34% of the USDA forecast versus a five-year average of 50% for this point in the marketing year. The slow pace may eventually force USDA to lower their export forecast. The top buyers were Vietnam at 61,491 bales, followed by China at 17,618, India at 13,810, and Pakistan at 12,671. Traders may have taken heart that China and India were involved for the second week in a row. The US CPC has given a 71% chance of La Niña during October to December, which chances decreasing to 54% in December through February. If it extends into the winter months, it could bring warm and dry conditions the southern US from southern Texas to the East Coast. World Weather Inc. expects West Texas to see limited rainfall over the next week, which will benefit cotton since rain fell abundantly in late August. Some showers may evolve again September 19-26. Conab raised its Brazil 2024/25 cotton production estimate to 4.06 million tons (18.65 million bales) from 3.93 million (18.05 million bales) in their previous forecast. The USDA’s August estimates were 17.00 million bales for 2024/25 and 18.25 million for 2025/26.

COCOA

December Cocoa was near unchanged overnight after a rally yesterday that took it to its highest level since September 3. The market may have gotten oversold on the low-demand theme last week, and uncertainty over the upcoming West African crop may have emerged. However, the dry pattern appears to be changing. World Weather Inc. says seasonal rainfall should finally begin to fall in in southern Ghana, southern Ivory Coast and southern Benin over the next couple of weeks. The overnight maps showed areas in southern Ivory Coast saw moderate rainfall of up to 42 mm over the last 24 hours. Some growers in Ivory Coast have also expressed  concern about the emergence of black pod disease. Bloomberg reported that buyers of Ghana’s cocoa have begun advancing part of more than $4bn to the country’s regulator, COCOBOD, to secure beans for the 2025/26 crop season. In 2023, COCOBOD introduced a new funding model requiring global traders to deposit at least 60% of the value of their forward contracts at the start of each season. The hope is that this will secure COCOBOD’s funding and allow them to pay growers enough to discourage smuggling.

COFFEE

December Coffee is chopping around in the upper end of a month long range and is in the vicinity of the contract high from April. A steady decline in ICE exchange stocks has supported the rally off the August lows, as US buyers have looked for ways to secure coffee ahead of the 50% tariffs on imports on Brazilian products. ICE certified stocks fell 9,557 bags yesterday to 669,991, the lowest since May 1, 2024. It appears that the case to determine whether President Trump overstepped his bounds in enacting the tariffs will be put before the US Supreme Court in November, which may put a decision date into early next year. The US Climate Prediction Center has given a 71% of La Niña occurring during October to December with a 54% chance of it continuing into December-February. At this point it is expected to be on the weak side. A winter La Niña pattern can bring wet conditions to Indonesia and Southeast Asia and cool conditions to southern Brazil. World Weather Inc says temperatures in Brazil’s coffee areas are expected to be near to above normal during much of the next 7-10 days and rainfall should be limited, except possibly Tuesday when it may a little more significant in Sul de Minas and a few neighboring areas. Temperatures usually warm up ahead of the monsoon season.

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