India’s Sugar Imports Surge

SUGAR

October Sugar was higher early Thursday and was back approaching last week’s 28-month highs. The rally in crude oil this week lends further support to a market already concern about lower production in Europe, India and Brazil and by high prices in India. The Indian government has so far received applications to import 800,000 metric tons of sugar under a duty-free quota of 1 million tons, which seems to be a stronger pace than what industry representative were forecasting last week. A representative of the Indian Sugar & Bio-Energy Manufacturers Association (ISMA) said the group is waiting for the next six weeks of rainfall data before finalizing its production estimate for 2026/27. He said El Nino could affect plantings next year, while the impact on the current year’s crop would depend on how rainfall progresses. El Nino is expected to peak in November and last through February. An adviser in the  Indian Prime Minister’s office said on Wednesday that the nation is looking to increase its use of biofuels to strengthen energy security, but that is a contentious issue considering the recent record sugar prices. World Weather Inc. says southern Brazil will see abundant rain in the coming week, with areas from Rio Grande do Sul to Sao Paulo and southern Minas Gerais getting plenty of rain. This is good for next year’s crop, but if the rains continue, it could spark an early end to the harvest season. Harvest tends to peak in the second half of July and work steadily lower through the end of the year. By mid-November, crush levels tend to be about half of the July rate.

COCOA

December Cocoa was near unchanged early Thursday but was holding Tuesday’s two week lows. The market reached its highest level in a year last week on concerns over potential for El Nino-induced dryness in west Africa to lower the coming year’s production. Some rain has returned to the region, but there will be ongoing concerns over whether the region sees enough rain as El Nino sets in. World Weather Inc. said beneficial rain fell on many cocoa areas in Ivory Coast earlier this week. Rain there will be lighter than usual through most of the next week, but enough should fall to support the needs of most crops. Not much change in weather is predicted for the next ten days, with waves of rain moving from east to west across west-central Africa providing some needed moisture for crop development. El Nino is supposed to peak in November and last into February. Indonesia has been the hardest hit so far. Bloomberg reported that Ghana’s cocoa industry regulator (COCOBOD) has proposed raising farmers’ pay by about 6% for the new season. This could further widen the gap over prices in Ivory Coast and risk more smuggling over the border. The revision is in line with Ghana’s aim to ensure that farmers get at least 70% of the free-on-board export cost in an effort to set a price floor for growers. There are concerns that cocoa traders, cooperatives and buying agents in Ivory Coast are struggling to use a new national traceability system introduced ahead of European Union rules banning imports of commodities grown on recently deforested land, which are due to come into effect in 2027.

COFFEE

December Coffee has broken below Tuesday’s to reach its lowest level since July 1. The market may be short term oversold, but it has also broken below a two month trading range, and that projects to 240.85, another 40 cents lower from here. Brazil’s largest coffee cooperative, Cooxupe, said its areas were 95.4% harvested as of September 4, another indication that Brazil’s harvest is just about complete. Near term supplies seem to be recovering. ICE certified arabica stocks increased by 1,614 bags on Wednesday at 220,452 after falling to their lowest level since February 1999 on Tuesday, and they are all from Brazil. This was their first daily increase since June 19. There were 1,922 bags that passed grading and 1,283 that failed, all from Brazil.  The number of bags pending review increased by 38,913 bags to 52,705. Of that total, 54,310 bags are from Brazil and 960 from Kenya. World Weather Inc. said frequent showers and thunderstorms into early next week will induce a greater amount of flowering in coffee production areas of Brazil. The moisture will be light to moderate most often, but through repetition a sufficient amount of moisture will occur to support flowering from Parana to Sul de Minas. Reuters reports that Robusta prices in Vietnam rose this week as forecasts of heavy rains in the Central Highlands raised concerns about potential crop damage and perhaps some flooding. Indonesia’s robusta crop is threatened by a lack of rain due to El Nino.

COTTON

After three attempts in as many days, December Coffee finally broke above the 21-day moving average early Thursday only to run up against resistance at the 9-day. US crop conditions did decline this week after a temporary improvement last week, but the trade is still cautious ahead of the USDA supply/demand (WADSE) report on Friday. World Weather Inc. say west Texas and Oklahoma will remain very warm to occasionally hot for another week. There is some potential for showers and thunderstorms, but the precipitation will be a little late to be of much use to this year’s crops. The Delta has been too hot and dry recently and significant change may not occur anytime soon. Cotton in most other U.S. production areas is in varying condition with most crops suspected of doing relatively well.  Agroconsult said on Wednesday that it expects Brazil’s cotton production to reach a record 4.5 million metric tons (20.7 million bales) in the 2025/26 season, an increase of about 300,000 tons (+1.4 million bales) from their previous forecast. The weekly export sales report will be released early Friday, but we don’t expect that to have much impact with the WASDE report due later that session.

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