Sugar Undermined by Lower Crude Oil?

SUGAR

The sugar market received bearish supply news last week from Brazil, with the UNICA report showing sugar production in the first half of April at 731,000 metric tons, up 1.25% from a year ago, and CONAB forecasting Brazil’s 2025/26 overall sugar production at 45.9 million metric tons, up 4% from 2024/25 and a new record. July sugar fell below 17 cents for the first time since January 22 on Friday but bounced off that level and closed higher on the day. The market perhaps found support from a better than expected US jobs report, a stronger stock market and a general risk-on mood in the markets. July Sugar may have also reached oversold levels following a 14% decline from its 2025 high on March 18. However, a sharply lower crude oil prices in the wake of another sharp increase in OPEC+  production over the weekend undermines support for sugar this morning. A report from Citi on Friday indicated they expect the global sugar market to show a deficit of 4.8 million metric tons for the 2024/25 marketing year but a surplus of 200,000 in 2025/26.

COFFEE

Citibank analysts said last week that they still think Brazil could report strong production this year, which is better than most expectations for a poor crop after the country’s main growing regions saw a record drought last year. In a report on Saturday, USDA FAS put India’s 2025/26 coffee production (Oct/Sept) at 6 million bags, which is close to last year. India is the world’s seventh-largest producers and compares to 69.9 million bags for Brazil, 29 million for Vietnam and 12.4 million for Colombia. The Ugandan agriculture ministry said on Friday that the nation exported 642,981 bags in March, up more than 90% from March 2024. Uganda is the largest coffee exporter in Africa, and they were sixth largest producer at 6.4 million in 2024/25. About 77% of India’s production and 84% of Uganda’s are robusta beans. World Weather Service expects very little precipitation in Brazil’s growing areas over the next 10 days with their dry season underway. Indonesia, Vietnam, Central America and both west and east-central Africa coffee areas will get rain routinely.

COCOA

Reuters reported this morning that Ivory Coast Cocoa Arrivals were estimated at 31,000 metric tons for the week ending May 4, up from 25,000 the previous week and 25,000 for the same week a year ago. Cumulative arrivals for the 2024/25 marketing year that began in October has reached 1.536 million tons versus 1.379 million at this point last year and a five-year average of 1.752 million. Arrivals have increased steadily over the past four weeks, which seems better than expected after drier than normal conditions this winter suggested that the crop could get off to a weak start. Better rainfall over the past couple of weeks have boosted expectations for the production later this summer. World Weather Service described an “erratic” rainfall pattern over the weekend and that the precipitation that has been falling in previous weeks should have most of the crop rated well. They do not expect any change in the pattern over the next week to 10 days, which they say  will be sufficient to support normal crop development. ICE certified stocks increased by 32,036 bags on Friday to 2.076 million, the highest since October 1. Stocks increased 113,481 bags last week.

COTTON

Any indications that China is open to trade negotiations with the US offers some hope of an improvement in US export prospects. China is the fourth largest buyer of US cotton so far this year at 687,000 bales versus 2.540 million for Vietnam, 2.251 million for Pakistan, and 1.576 million for Turkey. The tariffs (or threat of tariffs) sent the market in a tailspin in early April, but prices bottomed out within two days of the announcement and have held a modest uptrend since, aided by the postponement of the tariffs and a supportive stock market. The 90-day halt in the tariffs ends in early July, and the market could get anxious if no deals are announced before that date. Friday’s better than expected jobs number supported the stock market and cotton as well. Cumulative export sales for 2024/25 have reached 107% of the USDA forecast for the marketing year versus a five-year average of 106% for this point in the season, which suggests the USDA will not lower its export forecast in this month’s report. The May supply/demand report will be released a week from today, and it will have the first official estimate for 2025/25. Planting weather has improved greatly in West Texas over the past few weeks with the arrival of timely rains. World Weather Service expects more rain, especially next week. Field conditions in the Delta have also been improving as rains their have gotten lighter, but additional significant rain could set plantings back again.

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