Dry Brazil Could Stress Cane Crops

SUGAR

May Sugar gapped higher overnight and traded to its highest level since December 13 and extending a sharp rally from last week. The market has been supported recently by lowered expectations for Indian sugar exports after reports that mills were closing early. Dealers said Indian sugar exports had slowed because of rising domestic prices. Last week some were expected India’s exports to top out at 700,000 metric tons, well short of their quota of 1 million. The early mill closures in India are being blame on dry conditions. Earlier this year the market was pressure by the surprise announcement that India was going to allow exports at all. World Weather Service is also saying that drying in east-central and northeastern Brazil will eventually lead to sugarcane stress. Brazilian 2024/25 production has wound down and 2025/26 harvest should begin late March/early April. An analyst for a Thai sugar producer said last week that his nation’s 2025/26 sugar production could reach 11.5 million tons, up from 10.3-10.4 million in 2024/25.

COTTON

May Cotton gapped higher overnight and extended its rally off contract lows from February 1. The dollar is slightly  higher this morning, but last week it fell to its lowest level since mid-December, which improves the US export outlook. The National Cotton Council’s annual planting intentions survey announced over the weekend indicated US cotton growers will plant 9.6 million acres in this year, down 14.5% from last year. Upland cotton acreage is expected to decline by 14.4% to 9.4 million acres, while extra-long staple cotton acreage is projected to drop by 23.5% to 158,000 acres. 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. A few areas in the southeastern U.S. are still drier than usual and need rain as well. West Texas precipitation will remain insignificant into the first half of March.

COCOA

May Cocoa sold off on the opening last night but turned higher as the session progressed. The weather is looking a bit less bearish than it was last week. Ivory Coast farmers said on Monday that strong rains across the nation’s central region should strengthen cocoa trees and improve growing conditions for the April-September mid-crop. But they added that another strong rain was needed before the end of the month to improve yields. World Weather Service said most of the recorded rainfall has not been very great and that distribution has been erratic. Periodic rains are expected to continue over the next week to ten days, and a few strong thunderstorms may pop up, but the forecast does not show a generalized rain event. Temperatures will continue to be warmer than normal. Ivory Coast cocoa arrivals totaled 27,000 metric tons last week, down from 32,000 the previous week and 36,000 for the same week a year ago. Cumulative arrivals for the 2024/25 marketing year have reached 1.349 million tons, up from 1.092 million a year ago but below the five-year average of 1.454 million. ICE warehouse stocks increased by 816 bags on Friday to 1.384 million, but stocks fell 12,865 bags last week.

COFFEE

May Coffee extended Friday’s selloff overnight and traded to its lowest level since February 5. The market has moved into a gap area from February 5-6 and may find support at the February 5 close at 390.65. Prior to the selloff, May Coffee had traded to new contract (and all-time) highs for 11 sessions in a row, which left it vulnerable to a correction. There was an article in Reuters last Thursday that said a poll of analysts called for arabica prices to fall by 30% by the end of this year. They cited a favorable outlook for Brazil’s crop next year, provided the weather cooperates. World Weather Service says is warning that dry conditions expected in Brazil over the next 10 days will further deplete soil moisture and stress the 2025 crop. ICE certified arabica stocks decreased by 14,616 bags yesterday to 824,783, the lowest since October.

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