India & Brazil Increase Ethanol Share

SUGAR

March Sugar has seen choppy, sideways action this week, as the recovery rally off last week’s 22-month lows has stalled. Earlier this month, news that India was permitting sugar exports for the first time in a year sparked a heavy selloff, but the extreme cold in Louisiana and Florida last week raised concerns about the US cane crop. Overnight, the Indian Sugar and Bio Energy Manufacturers Association forecast India’s sugar output to fall to 27.27 million metric tons in 2024/ (ending September), which would be down 14.7% from 2023/24, as they expect mills to divert more cane to ethanol production. The UNICA report this week showed ethanol’s share of crushing increased to 79.2% during the first half of January, up from 66.0% a year ago. Rainy conditions in Brazil have improved the outlook for the 2025/26 crop, which typically begins harvesting in late March or early April. Their marketing year officially begins April 1.

sugar cane

COTTON

March Cotton extended its selloff overnight with another move to new contract lows. The trade was unimpressed by the export sales report yesterday, which showed US cotton sales for the week ending January 23 at 280,010 bales for the 2024/25 (current) marketing year and 38,632 for 2025/26 for a total of 318,642. There may have been some disappointment that current crop sales were below 300,000 after coming in above that level for the previous two weeks. The trade may also have tariffs on its mind, with the market anticipating an announcement this weekend on tariffs against Mexico, Canada and China. China and Mexico both buy US cotton. World Weather Service says rain will be needed during the second half of winter and early spring in the southwestern desert region, southern California and both South and West Texas to ensure favorable soil moisture for spring planting. Recent hot and dry weather in eastern Australia has stressed some unirrigated crops. Cotton planting in Mato Grosso, Brazil is well behind the norm with only 33.5% of the crop planted as of January 26 versus 75.2% a year ago. They need a dry spell, which may not come until late next week. Goias and Bahia are steady with year-ago.

COCOA

March Cocoa is lower this morning on follow through form yesterday’s range down action. The market has taken a turn lower this week on a slightly better forecast for west Africa and an increase certified stocks at the ICE, which hints that supplies are not as tight as feared. ICE stocks rose 18,428 bags yesterday to 1.367 million, the highest they have been since January 3. Stocks have increased 103,274 bags in the past four sessions. If that pace keeps up today, we could see the first monthly gain since May 2023. West Africa has started to see more rain events. They have been confined to the coast for the most part, but World Weather Service said the trend points to a normal beginning of a seasonal rainfall pattern. Dry and hot conditions over the past couple of months have raised concerns about the upcoming mid-crop.

March Cocoa sold off sharply yesterday after failing to push through the January highs this week. The market is still inside a consolidation pattern that has emerged since the market pushed to new all-time highs in December.

COFFEE

March Coffee opened sharply higher overnight at new all-time highs and then sold off to lower on the day. This is the most bearish technical action in a while. The market has rallied this week off a report from Conab forecasting Brazil’s 2025/26 coffee crop to come in 4% below last year, with arabica output expected to fall 12.4%. This is an off year for the arabica crop, and the record heat and drought in 2024 has lowered expectations further.  The market may have moved too far, too fast, and profit taking appears to have emerged. ICE certified arabica stocks have fallen sharply this week, and this is feeding ideas that major commercial users may be short bought. Stocks fell 17,109 bags yesterday to 885,886, the lowest since early November 25. However, the number of bags pending review increased by 44,614 bags yesterday to 77,955, the highest since December 17. Indonesia’s Sumatra robusta coffee exports totaled 20,941 metric tons in December, up from 4,705.6 tons a year earlier. Total exports for 2024 came in a 161,388 tons versus 148,404 in 2023, an 8.7% increase.

March Coffee could be vulnerable to a further correction given its overbought technical status and the fact the it has rallied 9.4% since breaking out above a six-week high last week.

 

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