Too Much Rain, Too Little Sugar

SUGAR

March Sugar turned lower early Friday after a three-day bounce off Monday’s low. The trade is weighing the collapse of the Brazilian real this week, which increases the incentive for Brazilian exporters to sell, against more evidence of problems with this year’s production because of too much rain. On Wednesday the Brazilian Agriculture Ministry put Brazil center-south sugar production for the first half of October at 1.87 million metric tons, -27.1% from the same period last year. Cane crushing was -21.3% at 27.3 million tons, and ethanol production was -26.1% at 1.53 billion liters. More rains are forecast for this weekend and next week will continue to slow harvest and increase the prospects for an early end to the harvest season. The Brazilian real was near unchanged overnight and towards the middle of this week’s range, which at its lowest point was at its lowest level since December. The fund net long in sugar has to be on traders’ minds. As of last week, the net long had reached a new record high, which left the market vulnerable to heavy selling. The selloff this week may have corrected some of that overbought condition. The bullish bias in energy lends support to sugar as well. Despite the overbought status and the weaker real, the global supply has been hit with poor weather in Europe, India and Brazil this year.

COFFEE

December Coffee was higher early Friday after a steady two-week decline that was accelerated by the collapse in the Brazilian real this week. The real was near unchanged overnight and also near the middle end of this week’s range. World Weather Inc, says northern growing areas of Brazil will experience net drying for a while, with southern areas will see enough to improve soil moisture. Overall, conditions are beneficial to 2027 production, if a little dry in the north. Parts of Indonesia are seeing beneficial rain after suffering from extremely dry conditions for the past couple of months. ICE certified arabica stocks increased by 3,033 bags on Thursday to 225,068 after falling to their lowest levels since September 15 on Wednesday. This was the second time in nine sessions that stocks increased. The amount pending review increased by 5,860 bags to 41,961, and they are all from Brazil. The recent drop in the real could eventually induce more Brazilian sales.

COCOA

December Cocoa was slightly lower early Friday but inside the range of the previous two sessions for the most part. The market is drawing support from guarded concerns over crop prospects in West Africa and Ecuador, but that is being countered by weather reports out of Africa that suggest recent rains have been timely enough to support upcoming output. World Weather Inc. expects regular rounds of showers and thunderstorms through the next week across west Africa that should be beneficial to cocoa, but the rains will also be scattered to light inland, which could bring concerns about net drying back to front and center. Coastal areas will be wettest as well as southern Cameroon, which has already seen plenty of rain. ICE cocoa stocks increased by 3,969 bags on Thursday to 3.689 million, reaching their highest level since May 27, 2024, which indicates current supplies are ample.

COTTON

December Cotton was lower early Friday after a higher close on Thursday from a supportive export sales report. Wet weather west Texas may have also lent support on ideas it will delay harvest, but that may only delay the inevitable. “Harvest Pressure” has been a theme this week. As of last week, 52% of the crop had been harvested. Yesterday’s export sales report showed cotton sales were the strongest in five weeks and were led by China for a change. The report showed net sales for the week ending October 22 at 216,488 bales for the 2026/27 (current) marketing year and 38,345 for 2027/28 for a total of 254,833. This was up from 199,630 the previous week and the strongest in five weeks. Cumulative sales have reached 49% of the USDA forecast versus a five-year average of 57% for this point in the marketing year. China bought 57,400 contracts, which is their largest purchase since March. World Weather Inc. said rain yesterday and today may delay harvesting and could induce a little yellowing of the crop. The Delta crops have been kept in the best condition due to dryness in recent weeks, and the dry bias will continue for another week. Rain is possible after that.

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