Oil Rally Lifts Sugar Market

SUGAR

May Sugar traded to a new high for the move on Thursday and for the most part was holding its gains from last week. The market has found support from the rallies in crude oil on ideas that it will encourage ethanol production from cane at the expense of sugar. Energy prices were higher overnight despite President Trump postponing his threatened attacks on Iranian energy infrastructure another five days. Safras & Mercado said Thursday that they expect Brazil to cut sugar exports by 14.2% in 2026/27 as mills divert focus more on ethanol. They are forecasting sugar exports around 29 million metric tons versus 33.8 million in 2025/26, with total sugar production at 40.3 million tons versus 43.5 million in 2025/26. Total ethanol production, including fuel made with corn, would increase 10.7% to 42.58 billion liters. They expect the Brazilian government to increase ethanol blending in gasoline from the current 30% to 35% in the second half of the year, and they expect sugar’s share of cane crushing to average 47% versus 49% previously 2025/26.

COCOA

May Cocoa was near unchanged early Friday with the market lacking a fundamental driver. Growing conditions in west Africa are conducive to a strong mid-crop, and demand is still uncertain after confectioners lowered reduced the amount of chocolate in their products, but with prices back near “normal”  levels (within a range of $2,000-$4,000 per metric ton) after reaching almost $13,000 last year, the market may be searching for some sort of bottom. Traders may have to wait until the first-quarter grind data is released on April 17 to get an idea whether lower prices have sparked a recovery in demand.  However, one clue is the backup of unsold beans in Ivory Coast.

COFFEE

May Coffee extended this week’s selloff from two-month highs early Friday but managed to recover back to unchanged as the season progressed. Recent talk that Brazilian farmers were reluctant to sell at current levels is countered by expectations of a strong Brazilian crop this year. Expectations for the 2026/27 arabica crop are ranging from 46-52 million bags versus estimated for 2025/26 of 36-39 million, and the estimates have been trending higher as the season has progressed. World Weather Inc. expects sunshine and a few scattered showers and thunderstorms in coffee production areas of Brazil during the coming week to ten days. Temperatures will also be seasonable resulting in a bottom line that is mostly good for late season crop development.  ICE certified stocks increased by 5,052 bags on Thursday to 549,711, their highest in a week.

COTTON

May Cotton was holding most of Thursday’s gains early Friday. Among other factors, dry conditions in Texas are raising concerns about the upcoming crop. World Weather Inc. says west Texas rain potentials are poor for the next ten days and that temperatures will be warmer than usual. South Texas and the Texas Coastal Bend will have improved opportunities for rain in April; though amounts will likely stay below normal. The US Drought Monitor on Thursday showed an area representing 91% of US cotton production was affected by drought as of March 24, up from 89% the previous week and 36% a year ago. For the USDA Prospective Plantings report on Tuesday, the Reuters poll has an average trade expectation for US 2026 cotton plantings at 9.229 million acres, with a range of 9.000-9.635 million. This compares to 9.283 million in 2025 and 9.400 million in the Outlook Forum from February.

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