Sugar Firms on India Output Cuts

SUGAR

May Sugar approached Tuesday’s high early Thursday but as of this writing it had not pushed through the high at 13.86. The market has drawn support this week on reports of lower-than-expected production out of India due to too much rain that has lowered cane yields. A Reuters article said internal estimates from five unnamed trade houses estimated India’s production at 28.5-29 million metric tons for 2025/26, down from the Indian Sugar & Bio-Energy Manufacturers Association (ISMA) forecast of 30.95 million from earlier this month. Yesterday’s UNICA report for the second half of January showed an increase Center South Brazil crushing from the first half of the month, but sugar production was lower because of the increased emphasis on ethanol. Crushing activity in a seasonally slow period,  which means the overall impact on production volume is minimal. Still, the sharp drop in sugar’s share of crush is noticeable.

COCOA

May Cocoa was lower early Thursday and was approaching Wednesday’s contract lows. The market has come under heavy pressure this past week on reports of heavy supplies of beans going unsold in Ivory Coast and Ghana because buyers are reluctant to pay official farmgate prices, which are much higher than the current world price. There were reports on Wednesday that Ivory Coast is considering cutting its official price, but the country’s regulator, the CCC, said it would keep the price unchanged until the end of the main crop on March 30.

COTTON

May Cotton was higher early Thursday, as the market managed to avoid a test of the February 6 contract low. Traders may be desperate to find something to give the market direction, with the only things on the horizon being the USDA Outlook Forum on Thursday and Friday and the weekly Export Sales report on Friday. One source of support is the crude oil market, which is higher off concerns about a potential US attack against Iran. The Outlook Forum will give an early idea of what USDA expects US cotton plantings to be this year.

COFFEE

May Coffee was lower early Thursday and was approaching Tuesday’s six-month lows. The market has undergone heavy selling pressure since it broke below a five-month consolidation in late January. Expectations for the upcoming crop have been strong, with adequate rainfall reported over the past two months and the fact that this is the “on-year” in the crop’s biennial cycle. However, Bloomberg posted analysis from the Brazilian firm Valor International that raised the possibility of too much rain fueling the spread of diseases on arabica plantations, specifically phoma leaf spot and coffee leaf rust. In the meantime, World Weather Inc. says Brazil coffee areas are suspected of being in good shape with normal production potentials due to timely rain alternating with periods of sunshine and seasonable temperatures. They reported that rainfall has been limited in recent days, allowing the region to dry down for a little while. Shower and thunderstorm activity will gradually resume over the next few days with slightly greater rain coverage and amounts expected through the weekend.

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