SUGAR
March Sugar traded to its highest level since January 2 overnight but has yet to take out that day’s high at 19.94. The Australia-based sugar analysis firm Green Pool said today that they expect the global sugar balance to show surplus of 2.7 million metric tons in 2025/26, up from a deficit of 3.7 million in 2024/25. Global production is forecast at increase by 4.5% to 202.0 million tons, the second highest on record, with higher output expected in Brazil, India, and Thailand. They look for Center-south Brazil production to come in at 41.6 million tons, up from 39.95 million in 2024/25, with the proportion of cane crushed for sugar to rise to 50.9% from 48% in 2024/25. (Recent trends for 2024/25 show a dramatic, late-season shift to ethanol.) Global consumption is expected to increase by 1.2% to 198.3 million tons in 2025/26, the same growth rate as the previous season. Torrential rain and flooding in northeast Australia may have destroyed as much as 1 million metric tons of their cane crop, which would reduce Australia’s annual sugar output by about 130,000 tons. World Weather Service says heavy rain will resume in northeastern Queensland later this week, during the weekend and into next week.
COCOA
May Cocoa was slightly lower overnight and back in the vicinity of last Friday’s low. The market is in a consolidation pattern, but the approach of the rainy season in West Africa may have eased concerns about the upcoming mid-crop. Mondelez reported that they expect their 2025 profit to fall 10% on an adjusted basis versus a previous forecast calling for a decline of 6.7%, due to surging cocoa prices. This estimate does not reflect any import tariffs by the US or potential retaliatory actions taken by other countries. Volumes in Europe, their largest market by revenue, fell in the fourth quarter on account of incremental price hikes, while volumes increased in North America following a 0.9% reduction in prices. World Weather Service that west Africa should see regular rounds of showers and thunderstorms near the coast, with some advancing a little farther to the north during the middle to late part of next week and increasing in frequency. Seasonal rains usually resume this time of year. The moisture will be welcome as it would bring some relief to hot and dry conditions. ICE warehouse stocks fell 5,553 bags yesterday to 1.405 million, the first daily decline in seven sessions. They are the second highest they have been since December 17.
COTTON
March Cotton extended yesterday’s rally slightly overnight, trading to its highest level since January 28. The market has seen a sharp, two day rally after putting in new contract low on Monday. The initial reports of tariffs against Mexico and China led to some panic selling on fears of retaliation, and there may have been some relief when China’s measures did not include agricultural products. China has been a major buyer of US cotton in the past but not so much this year, and they do not have a lot of outstanding sales to cancel, which limits the retaliation threat. The dollar has fallen back after Monday’s rally, which improves US export prospects, and it is lower again today. World Weather Service says Eastern Australia’s unirrigated summer grain and cotton crops will continue to be stressed by limited rain and periodic warm weather. Brazil cotton areas are seeing frequent rain that slowing harvest progress and raise concerns over the potential performance of Safrinha cotton once it gets planted. US southwest and Texas need rain ahead of their planting season.
COFFEE
March Coffee traded to its ninth straight all-time high yesterday and is inside yesterday’s range this morning. This week’s report from Comexim called for Brazil’s arabica crop to fall 12% from last year, which was close to Conab’s forecast for at 12.4% decline. However, Comexim’s robusta forecast calls for a 24% gain versus Conab’s 17.2% increase. Overall production is expected to be down anywhere from 1.8% to 2.4%. The lower arabica forecast reflects the fact that it is an off-year as well as the expected effects from the drought and extreme heat Brazil experienced last year. There were some concerns expressed yesterday about the potential for the Trump Administration to tariff South American countries that are key coffee producers. Trump already threatened to tariff Colombia in a disagreement over returning illegal immigrants, but he was able to reach an agreement with the leader of that nation. ICE certified arabica stocks fell 1,224 bags yesterday to 854,593, their lowest since November 12. Stocks have declined 72,697 in five sessions. However, the number of bags pending review increased by 10,908 to 135,770, their highest since last March. They have increased 130,156 bags in five sessions.
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