El Niño Supports Sugar

SUGAR

July Sugar was higher early Wednesday, as the market continued to consolidate inside this month’s range bound roughly by 14.50 and 15.50. Czarnikow is projecting a modest surplus of 1.4 million metric tons for 2026/27 season, thanks largely to increased output from China. They warned that this could be undone if El Nino causes even marginal production losses or if top grower Brazil diverts more cane to ethanol production rather than sugar. Other forecasters have started to temper their surplus projections for 2026/27 citing El Nino and higher ethanol production.

COFFEE

July Coffee has been consolidating last Friday’s selloff for the past three sessions. The large Brazilian crop that is starting to be harvested this month has helped send the market to its lowest level since last summer. The International Coffee Organization (ICO) reported on Tuesday that global green coffee exports totaled 117 million bags in March, +0.8% from a year earlier. Increased robusta and central American arabica exports were largely offset by lower exports out of Brazil and Colombia. Robusta exports reached a record 5.52 million bags, +24% year-on-year, mostly due to a 30% increase from Vietnam. Arabica exports from Colombia and Brazil saw drops of 34% and 17%, respectively. The USDA is forecasting Indonesia’s 2026/27 coffee production (mostly robusta) at 11.38 million bags, -8% from 2025/26. The report blamed excessive rains during the flowering and fruit development stages in some of the growing regions for the decline. This year’s dry season is expected to be drier and longer than normal due to El Nino. World Weather Inc. expects a few showers to occur daily in the coming week to ten days in at least a part of Brazil’s coffee growing areas, and a few may see heavier amounts that could briefly disrupt farming activity. No widespread general soaking is predicted, and crop maturation, harvesting and drying of picked beans will advance around any showers that occur. Coverage will vary from 15-35% of production areas

COCOA

July Cocoa was lower early Wednesday and was inside the range of the previous two sessions. From a technical standpoint, the market’s failure to close Monday’s gap lower at 4002 may encourage sellers. World Weather Inc. says rain and thunderstorms are expected to occur periodically across cocoa areas in West Africa over the next several days. Daily rainfall should be light to moderate, and all areas will eventually be impacted, which they say should support crop development. Earlier this week we heard about Ivory Coast farmers complaining about a lack of rain the last couple of weeks. Ivory Coast cocoa port arrivals since the marketing year began in October have reached 1.603 million tons, up from 1.560 million at this point last year and below the five-year average of 1.773 million. On the whole, West African mid-crop production is expected to be strong, but the arrival of El Nino, which is expected next month, could bring dry conditions that would reduce output late this year or in 2027.  Demand remains a concern as well, as does unsold supply from the 2025/26 main crop.

COTTON

July Cotton was lower early Wednesday as possibility of much-needed moisture coming to the US cotton belt as well and an underwhelming take on the potential for increase US cotton exports to China from last week’s meeting weighed on the market. The overnight maps showed most of the rain in Texas over the last 24 hours was in the eastern half of the state, with very little out west. The entire state has a chance rain or thunderstorms over the next 24-48 hours, but once again, the heaviest amounts are expected in the eastern half. However, it appears that west Texas will not miss out. Moisture is needed there for planting and emergence.

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