Market Eyes UNICA Sugar Report

SUGAR

March Sugar extended its selloff into a third session overnight after reaching a two-week high on Monday. The bulls were likely disappointed that the market failed to reach the 50-day high on Monday.  UNICA will release their Brazilian sugar production report for the second half of August this morning, and expectations are leaning bearish. A survey of analysts conducted by S&P Global last week called for center-south production to come in at 3.8 million metric tons, which would be up 17.3% from a year ago. Brazilian production has a tendency to peak in late July, but the slow start in June and the dry conditions in the center south region since may have led to a late-season surge. If the second-half August number comes in at expectations, it would put cumulative production -2.2% from a year ago. The co-head of sugar trading at Sucden cited a lower trend in global consumption due to weight-loss drugs, geopolitical challenges in smaller nations, demographic pressures in Russia, Japan and China, and unexplained declines in countries like India and Indonesia. He also raised the possibility that India could export as much as 4 million tons of sugar in 2025/26, which is higher than the 2 million that farmers’ union had posited earlier this week. They also may feel pressure to export over the next 6-7 months, ahead of Brazil’s new season.

COCOA

December Cocoa was slightly higher overnight but inside the lower portion of yesterday’s range. The market has been chopping around this week, supported by reports of black pod disease in some areas of west Africa, but seeing pressure from the arrival of rains after an extended dry spell in Ivory Coast and Ghana. The overnight maps showed rains moved into central Ivory Coast and Ghana over the last 24 hours, covering both nations (if not entirely, then a good portion of them). World Weather Inc expects rain and thunderstorms to continue in key cocoa production areas from Ivory Coast through Ghana and Benin to Nigeria and Cameroon during the next week. Eventually, all production areas will be impacted multiple times and sufficient rain is likely to improve main season crop development conditions and to induce mid-crop flowering. There have been reports of black pod disease on southwestern Cameroon after weeks of heavy rains there. One official told Bloomberg that counterfeit agrochemicals have also contributed to the problem. Cameroon is the fifth largest grower in the world and represents roughly 7% of world production versus 38% for Ivory Coast, 12% for Ghana, and 10% for Ecuador. ICE exchange stocks fell 11,573 bags yesterday to 2.069 million, the lowest since May 1. Stocks have fallen for 10 straight sessions, and they are down 91,556 bags so far this month.

COFFEE

December Coffee gapped lower overnight following a weak close yesterday after reaching new contract highs. The rally this week took the nearby contract to its highest level since January, but it failed to take out the January all-time high at 440.85, was a disappointment to the bulls. ICE certified stocks increased 2,537 bags yesterday to 668,875 after falling to their lowest level since April 30, 2024 on Monday. This was their first increase in 15 sessions and may have also contributed to the weakness. Spec buying surged this week on reports from the Brazilian Association of the Industry of Soluble Coffee (ABICS) that the nation’s soluble coffee exports to the US were down 60% from a year ago during August due to the tariffs. NOAA is giving La Niña a 71% chance of developing from October to December, which could keep conditions in Brazil dry right into flowering and cherry setting for the 2026/27 crop. However, World Weather Inc. does not expected the event to be intense or long-lived. The overnight maps showed Brazilian coffee areas have seen almost no rain over the last 18 hours except for a minimal amount in a small area of Minas Gerais. World Weather Inc expects rain to be restricted through the weekend and temperatures will be warm which should maintain a stressful environment for many crops. Rain chances are still expected to improve next week as a frontal system moves through the region, but confidence in the amount of rain that will fall is low.

COTTON

The nearby Dollar Index has fallen to its lowest level since July 1, which was the day it fell to its lowest level since February 2022. This is due to expectations that the Fed will cut rates by 0.25% this week. A “buy the rumor” scenario may leave the dollar subject to a rally and the cotton market a decline once the announcement is made later today. The weak dollar makes US cotton more competitive on the global market, and US growers are certainly anxious to see an improvement in US export sales. Cumulative sales for 2025/26 are the lowest in 11 years and had reached only 34% of the USDA forecast for the marketing year in last week’s report versus a five year average of 50% for this point in the season. Market bulls may have been encouraged by the emergence of China and India as active buyers in recent weeks, and perhaps the weak dollar will encourage more buying. World Weather Inc. says west Texas crops are favorably rated bit some rain might be welcome in the dryland areas of the southwest. Some producers would rather not have warm and moist conditions for the next few weeks so that crops will finish out normally before the first frost and freezes of the season arrive. Delta crops have dried out greatly, resulting in some crop stress, and late season boll sizes may be smaller than usual, but the fiber quality is likely above average. Northern India may may have been a little too much rain for cotton. Texas crop conditions have declined for the past couple of weeks, but they are still much above average.

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