Weather Widens Global Sugar Deficit

SUGAR

Analysts have tightened their outlooks for global supply due to problems with too much moisture in Brazil and heat and drought in Europe, but on the other hand, India’s monsoon appears to be performing better than what was feared going into the season. Green Pool is forecasting a 2026/27 global sugar deficit of 3.34 million metric tons, which is bigger than the 1.76 million-ton deficit they forecast in June. They blamed the rains in Center-South Brazil that have slowed the cane crush and the heat and drought in Europe that is hurting the beet crops not only in the EU and UK but also in Russia and Ukraine. Recent warm and dry conditions in Brazil should be beneficial for harvest. Reuters updates show favorable conditions for developing crops in China, southern India, and eastern Australia. The forecast for France still calls for mostly dry conditions and temperatures above to well above normal, which will not help the beet crops there. India’s Meteorological Department reported on Wednesday that India’s cumulative monsoon rainfall was 15% below normal as of July 29, a substantial improvement from 42% below normal on June 30. This appears to be better than some of the predictions from earlier in the season. India’s Earth Science Ministry had initially warned that this year’s monsoon could be the weakest in 11 years.

COFFEE

September Coffee was higher early Thursday but inside Wednesday’s range. The market set back on Wednesday, perhaps on reports of good harvest conditions in Brazil. Brazil’s largest coffee co-operative said its farmers had harvested 58.3% of their crop as of July 24, up from 47.3% a week earlier but still down from 67.1% for this point last year. World Weather Inc. says not much precipitation is expected in Brazilian coffee areas during the next week, which should help advance the harvest. Rain potentials may increase in Parana and Sao Paulo during the latter part of next with some of that moisture expanding into Sul de Minas during the following weekend. Areas from northern Minas Gerais into Bahia will remain dry through August 10. A report from Reuters said rains in Brazil rains have induced some early flowering. The biggest ​flowering period is from September and October. The early flowering could lead to early fruit dropping, but it is also good for long term tree health. Brazil’s green coffee exports during the first half of the year were down 36% from the same period in 2025. Exports to Europe were down 11%. Coffee traders in Vietnam told Reuters that El Nino’s had yet to have any impact on the coffee crops there. They anticipate problems developing between November and March, during the harvest and irrigation period, which would threaten next year’s output.

COCOA

September Cocoa was lower early Thursday and remained inside the downward sloping channel of the past three weeks. World Weather Inc. says west Africa rain during the next week will be greater than what occurred in recent weeks and that cocoa areas from Ivory Coast to Cameroon and Nigeria will see regular rounds of precipitation through the period.  Crops will benefit from the moisture.  Ghanan farmers expressed concern this week about too much moisture causing disease and about heavy rains knocking flowers of trees and/or inhibiting pod setting. In contrast, Ivory Coast farmers were upbeat about recent sunny conditions that have been good for pod development and pod health. There seems to be a level of anxiety over wheat El Nino will bring. In the past it has been blamed for too much moisture in August that caused problems with Black Pod and Swollen Shoot disease and for extremely dry conditions in December/January that lowered stunted the mid-crop. ICE warehouse stocks fell 309 bags on Wednesday to 3.375 million after reaching their highest level since June 18, 2024 on Tuesday. This was the first time stocks fell since July 15 and only the second time this month.

COTTON

December Cotton was higher early Thursday but inside Wednesday’s range, as the market continued the choppy, sideways pattern that it has followed this month. The dollar is lower today on the Fed’s decision to hold rates steady, which should be beneficial for US export prospects. Crude oil is slightly lower but holding most of its gains from the previous two sessions and US stepped up its attacks on Iran overnight after a US LNG tanker was hit by a drone on Wednesday. World Weather Inc. says the US Southern Plains and a part of the Delta will be drying out over the next ten days. Hot temperatures and limited rainfall in West Texas will stress crops and raise the potential for lower production. Crop stress will be greatest in the drier areas of the central and north initially. Xinjiang, China weather will turn hot again during the first week to ten days of August, and this could begin a more serious bout of crop stress that could harm production more than the two short bursts of heat did in early July and last week. We’ll see if there will be some improvement in the export sales report today after two dismal weeks.

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