Sugar Rejects Bullish UNICA Numbers

SUGAR

October Sugar was sharply lower overnight, falling through Friday’s low to its lowest level since January 2023. The UNICA report released during the session was slightly bullish against expectations, which lent some support to the session yesterday, but the selling resumed overnight. Despite the report showing Brazil Center-South sugar production for the first half of June down 22.1% from a year ago, apparently some traders viewed the fact that the proportion of cane used to produce sugar rose to 51.5% from 49.7% a year earlier as particularly bearish as it indicated that sugar remains more profitable than ethanol despite the drop in prices, which would support more sugar production. The Brazilian real has reached its highest level since September, but that does not appear to be discouraging sales. S&P Global reports that Thailand’s cane area is projected to expand due to two main factors: higher rainfall year-on-year and better margins associated with sugarcane compared to cassava. Total monsoon rainfall recorded in northern, northeastern, central, and eastern Thailand reached 1,764 mm, 409 mm higher than normal and 540 mm higher than the same period last year. World Weather Service says India’s rain will be greatest in the central, north and eastern parts of the nation during the next ten days resulting in local areas of flooding and some crop damage warranting some replanting. South India is expected to be drier than normal.

COFFEE

September Coffee is back near Friday’s six-month low this morning. Brazil has no freeze threat on the horizon that would threaten the current or new crops. Mexico is seeing heavy rains that could cause some flooding, but it also helps reduce their long-standing drought. There are concerns about other growing areas. World Weather Service reports that less than usual rain continues to impact coffee production areas in Indonesia and that the region will need rain soon to protect production potentials. Rainfall has also been light and more limited than usual in southern India, parts of Vietnam’s Central Highlands and a few areas in the Greater Antilles.  Brazil temperatures may trend a little warmer through mid-week and then trend cooler during the weekend, but there will be no risk of crop damaging cold.

COTTON

December Cotton was higher overnight following yesterday’s selloff in the wake of the June Acreage report that put US all cotton planted area at 10.12 million acres vs 9.867 million in the March Prospective Plantings report and 9.735 million expected from a pre-report Reuters poll (range 8.800 to 9.985 million). The fact that acreage went up instead of down from the March number and was above the upper end of the expected range was viewed as particularly bearish. The largest increase occurred in California, which saw an additional 16,000 acres from the March estimate, followed by Florida, which was up 15,400, New Mexico (+12,900) and Oklahoma (+12,100). Plantings in Texas increased 3,600 acres. Alabama and South Carolina saw declines of 5,600, and Arizona fell 15,700. Mississippi was unchanged.

COCOA

After a six-day recovery rally off the 200-day moving average, September cocoa sold off sharply overnight and is heading back towards that line this morning. Growing conditions in West Africa look benign. Ivory Coast farmers told Reuters that adequate soil moisture is fostering abundant flowering on trees, pointing to a good start for the main crop. World Weather Service says west-central Africa will have opportunity for showers and thunderstorms during the next week to ten days. Daily rainfall will be erratic and mostly light to moderate, with some potential for moderate to heavy rain in a few areas. Nearly all of the region from Ivory Coast to Nigeria and Cameroon will be impacted by rain at one time or another by mid-week next week.

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