Sugar Eases Ahead of UNICA

SUGAR

July Sugar closed a gap from April 7 early Thursday and then sold off, having met an upside target. UNICA will release its final update on Brazil center-south sugar production for 2025/26 and its first one for 2026/27 today. A survey of analysts by S&P Global this week put estimates for Brazil center-south sugar production for the first half of the month at 541,000 metric tons, which would be down 26.4% from the same period in 2025. Cane crush is expected to grow by 5.8% to 17.64 million tons for the period, but ethanol production is seen rising 23.5% to 1.13 billion liters. The 2026/27 marketing year officially began April 1. Higher energy prices can lead to more use of cane to produce biofuel ethanol and therefore reduce sugar production, and that has been a driving factor for the rally this month. Brazil has been expected to boost ethanol production this year, and this week there were reports that India would increase allowances for a higher percentage of ethanol in the gasoline mix. The anticipated arrival of El Nino in May or June has started to alter expectations for next year’s production.

COTTON

July Cotton was sharply higher early Thursday and was approaching last week’s contract high. Sharply higher crude oil prices lend support to cotton on ideas that they boost cost of polyester, a key competitor for cotton. Higher fertilizer costs also raise the cost of cotton production. The rally overnight happened despite what appears to be an improvement in rainfall coverage for the US cotton belt. World Weather Inc. expects rains west Texas late Thursday and into Friday which should boost topsoil moisture for early May planting, but they stressed that follow up precipitation will be important. The Delta could quite a bit of rain this weekend, resulting in flooding in some areas. South Texas and lower parts of the Coastal Bend region of Texas will continue to struggle. The export sales report is due out today as well.

COCOA

July Cocoa is still trading inside the range of the past couple of months. It has been building a base since putting in a contract low on March 2, but it has consolidated since reaching a two-month high in mid-April. Some analysts are starting to cut their production outlooks for 2026/27 with the expected onset of El Nino in the coming months, as that could bring drier conditions to West Africa. World Weather Inc. cautions that the relatively quick onset of El Nino does not necessarily mean the weather affects will be seen right away, everywhere. For much of the world it could take until the 4^th quarter before they are felt. The shortage of fertilizers due to the closure of the Strait of Hormuz could negatively impact tree health.

COFFEE

July Coffee was under pressure early Thursday, as the expectations for a strong arabica crop in Brazil, which is expected to begin in earnest in the next few weeks, weighed on the market. Generally dry weather in Brazil should be beneficial for harvest. The Coffee Trading Academy raised its forecast for Brazil’s coffee crop 71.4 million bags, a new record and an increase of 11.5% from 2025/26. The arabica crop is expected to reached 47.9 million bags, up 13.5% from last year, and robusta is forecast at 23.5 million bags, up 7.6%. These estimates are based on a survey of farmers, who credited strong off-season rainfall for the increase in expectations. growth. Total acreage under coffee production expanded 2.97% year-on-year, with arabica area up 2.7% and robusta area up 3.6%. Fertilizer application was +5.4% from the prior season. These forecasts are up from ones CTA published in November that put total production at 69 million bags.

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