Sugar Steadies After Oil Drop

SUGAR

May Sugar was lower early Tuesday but was back to nearly unchanged as the session progressed. The market fell under pressure after President Trump suggested during a press conference late Monday that the Iran war could end soon, which sent oil prices plummeting from 3 ½-year highs. High oil prices support ethanol prices, and sugar cane is a key feedstock for ethanol production in Brazil and India. The Brazilian real shot up on Monday, which also reduced the incentive to sell sugar for export. On the other hand the trade has also been worried about raw sugar demand because of one of the world’s largest sugar refiners is located in the Persian Gulf, which means the closure of the Strait of Hormuz shuts off a major buyer of raw sugar. There has been a shift in global expectations towards a tighter supply situation in 2026 due to reduced beet plantings in Europe, recent revisions lower in India’s 2025/26 crop, and expectations for more ethanol production in Brazil.

COCOA

May Cocoa extended its recent gains early Tuesday, now that the market has support on expectations that burdensome cocoa supplies in Ivory Coast and Ghana would start to get sold now that two nations have lowered the official prices for newly-harvested beans. Ivory Coast port arrivals totaled 15,000 metric tons for the week ending March 8, down from 28,000 the previous week but up from 14,000 a year ago. Cumulative arrivals since the marketing year began in October have reached 1.350 million tons, down from 1.400 million at this time last year and below the five year average of 1.509 million. Arrivals are the lowest for this point in the season since 2023/24 and the second lowest in at least six years. Ivory Coast farmers interviewed by Reuters said steady rainfall in many of the nation’s main cocoa-growing regions will produce enough small and average-sized pods to ensure a strong March-to-August mid-crop.

COFFEE

May Coffee’s failure to take out the February 13 high on Monday clearly disappointed the bulls. The market found support last week from a dry spell that had emerged in Brazil, but key arabica growing areas saw rain over the weekend, and more is expected over the next week or so. There were also reports that Brazilian growers were reluctant to sell at prices that were 15 cents/pound off their peak from October. A sharply higher Brazilian real on Monday may have also discouraged selling for export.  On the whole, the trade is expecting a strong Brazilian crop this year, as it is the “on-year” in the crop’s biennial cycle and the growing conditions have for the most part been good.

COTTON

May Cotton was higher for the second straight session early Tuesday on relief that crude oil prices were well off Monday’s highs that also sparked a recovery in equity markets. The dollar was lower, which is also supportive to cotton. President Trump suggestions on Monday that the Iran war could be nearing an end calmed markets that had been spooked by the threats to world oil supply. The de-facto shutdown of the Strait of Hormuz also triggered concerns about fertilizer supply we head into the 2026 planting season. Planting conditions remain dry in Texas.

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