Global Sugar Supply Looking Less Tight

SUGAR

March Sugar was near unchanged overnight and was hovering around last week’s lows. The market has been in a choppy downtrend since putting in a high in September when the Brazilian drought seemed to be at its worst after wildfires affected cane growing areas. Since then, rains have arrived that have improved the outlook for the 2025/26 crop. We look for the UNICA bi-monthly report on Brazilian Center-South sugar production for the first half on November to be released this week. During the second half of October, production was 1.78 million metric tons, 24.3% below a year ago. Cumulative production since the marketing year began on April 1 had reached 37.4 million tons, up 0.3% from last year. This was down from being as much as 66% ahead of a year ago in early May,  but it has long been expected that this year’s production would eventually fall behind because of the drought. Last week, USDA put world sugar production for 2024/25 at 186.6 million metric tons, up 595,000 from their previous forecast in May and up 2.8 million from 2023/24. Brazilian production was estimated at 43 million tons, down 2.5 million from last year but still the second highest on record. Earlier, the International Sugar Organization had reduced it its projected global supply deficit for 2024/25 to 2.51 million metric tons from 3.58 million previously. They also changed the 2023/24 setup from a modest a deficit of 200,000 tons to a surplus of 1.31 million. Brazil’s Petrobas is in talks with Raizen and Inpasa for a possible joint venture in ethanol, according to two sources who told Reuters. Raizen is the world’s largest sugar processor. This would mark a comeback to the biofuels sector for Petrobas.

COTTON

March Cotton traded to its highest level in more than a week overnight. The dollar is sharply lower this morning after breaking out of a two year range last week to trade to its highest level since November 2022. If this is a top for the dollar, it could improve US export prospects. Export sales last week showed a dramatic improvement, with net sales for the week ending November 14 at 318,516 bales for the 2024/25 (current) marketing year and another 16,016 for 2025/26, for a total of 334,532. This was up from 154,284 the previous week and was the highest since May. President-Elect Trump’s nomination of Scott Bessent for Treasury Secretary supported global stock markets and pressured Treasury yields on ideas he might restrain debt levels, all of which is supportive to cotton demand. Crop weather around the world is generally benign. World Weather Service says late season harvest conditions across the US will be relatively good, although some rain is expected in southern California and in southeast this week. The southeast rain will miss northern Florida and southwestern Georgia as well as parts of southern Alabama. Recent rain and that which is coming in the next week to 10 days in Australia’s eastern dryland crop region of New South Wales and Queensland will improve dryland planting, emergence and establishment conditions.

COCOA

March Cocoa is lower this morning but inside Friday’s range. The market reached a new contract high last week, and the nearby contract reached its highest level since September. Ivory Coast cocoa arrivals totaled 94,000 metric tons for the week ending November 24, the same as the previous week but up from 64,000 year ago. Cumulative arrivals since the marketing year began on October 1 have reached 643,000 tons, up 34% from 481,000 at this point last year and slightly above the five-year average of 642,600 for this point in the season. The arrivals pace did not increase last week, but it hovered at  marketing-year highs. The trade has been concerned that excessive rainfall in late October may have slowed the development of young pods and caused problems with disease, and a recent dry trend has the trade worried that the Harmattan winds will be strong this year and will limit pod growth further. La Niña can bring cooler than normal temperatures to West Africa, but it has been slow to develop and is not expected to be very strong. Not much precipitation of significance occurred in West Africa Friday through Sunday afternoon.

COFFEE

March NY Coffee extended last week’s rally overnight to trade to new contract highs. London Robusta Coffee was sharply higher and approaching its contract highs from September. Heavy rains in Costa Rica destroyed close to 15% of the nation’s coffee crop, according to their marketing agency, ICAFE. Back in June, USDA forecast Costa Rica’s 2024/25 arabica production at 1.1 million bags, which versus some 45 million for Brazil. Ongoing concerns about Brazil’s 2025/26 crop in the wake of this year’s drought is supporting the market. The weather has turned much wetter over the past month or so, but there are anecdotal reports of low numbers of cherries on trees. Brazil exports have been very strong this year due to a poor harvest in Vietnam last year. Vietnam’s new crop harvest is progressing, but farmers appear to be in no rush to sell. According to World Weather Service, Brazil coffee areas saw active rainfall over the weekend. Conditions are expected to trend a little drier through Thursday before another wave of rain arrives. Indonesia’s abundant rain of earlier this month seems to be winding down, although more showers are expected later this week. Vietnam’s Central highlands are expected to see net drying over the next over the  next week to 10 days, which should favor crop maturation and harvest.

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