Sugar Consolidates After Selloff

SUGAR

May Sugar is seeing choppy action this week as it consolidates after selloff that was driven by heavy deliveries against the March contract and trader disappointment over the market’s inability to push above the 20-cent level. Brazil’s lack of rain is raising some concern, but the new harvest season is still a few weeks away. Their 2024/25 production is running about 5.6% behind a year ago. The next biweekly report from Unica should be released late next week. The 2025/26 crop year begins April 1. Crude oil is higher today, which offers some support.

COFFEE

May Coffee is lower this morning, extending it selloff from yesterday. Dry weather in Brazil has been a supportive factor recently, but demand concerns have emerged as well. At the US National Coffee Association’s annual convention in Houston, attendees said that global coffee trade has gotten extremely quiet as supermarkets have pushed back against higher prices. World Weather Service said yesterday that they still see a chance of better rainfall for Brazil coffee growing areas in the second half of next week, but they were not convinced that this would be the beginning of a normal rainfall pattern. Farmers in Brazil and Vietnam were reported to reluctant sellers as they wait for higher prices, but traders and roasters say they have slashed their purchases to minimal levels. ICE certified arabica stocks increased by 11,949 bags yesterday to 794,681. The amount pending review fell 10,928 bags to 40,386, the lowest since January 29.

COCOA

May Cocoa is higher this morning as the market takes back some of its losses from earlier this week. West Africa is gradually emerging from the dry season, but hot weather is preventing a recovery in soil moisture. World Weather Service expects a mix of rain and sunshine during the next week. Normally, such a mix would be looked upon favorably, but the rain amounts appear to be coming up short. Cameroon saw some light rain over the last 24 hours; other areas in West Africa were dry. ICE certified stocks increased 19,136 bags yesterday to 1.453 million. Stocks are up 1,365 bags from a week ago, which is a small increase when compared to day to day fluctuations of 10,000-20,000 this week. The ICCO surprised the market last week with a forecast for a 142,000-ton surplus in 2024/25 after three years of deficits, but much of that surplus is based on lower consumption. High prices pressuring demand remains a concern for the bulls, but the market has also become technically oversold. At this week’s low, May Cocoa had fallen 36% from its December high.

COTTON

May Cotton saw a sharp recovery yesterday  in the wake of a strong export sales report, but it has once again been stopped by the 9-day moving average. A lower dollar and dry conditions in Texas are supportive factors, but the market continues to struggle against poor demand expectations. Yesterday’s export sales report showed US cotton sales for the week ending February 27 at 241,487 bales for the 2024/25 (current) marketing year and 105,634 for 2025/26 for a total of 347,121. This was up from 199,498 the previous week and the highest since January 16. Cumulative sales for 2024/25 have reached 9.852 million bales, down from 10.529 million at this time last year and below the five-year average of 12.458 million. Sales have reached 96% of the USDA forecast, which is right in line with the five-year average for this point in the marketing year. The largest buyer this week was Pakistan at 180,136 bales (old and new crop combined), followed by Vietnam at 75,285, China at 46,776, and Turkey at 43,101. Shipments totaled 334,035 bales, up from 267,538 the previous week and the highest for the marketing year so far. The dollar was lower again overnight , which makes US exports more competitively priced. Traders are expressing concerns that early cotton planting has been delayed in dryland areas in South Texas due to the dry conditions. The US drought monitor showed 38% of US cotton production was in an area experiencing drought as of March 4, up from 28% the previous week. The drought this week expanded into some key growing areas in West Texas.

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