Thailand Rain Eases Sugar Concerns

SUGAR

March Sugar was higher early Thursday, extending its rally off Tuesday’s four week low. The marker reached contract highs earlier this month off lowered production forecasts for several global producers, including Europe, India, Brazil and Thailand, but the fund net long has reached near record levels, which has made the bulls nervous. So far the market has not seen much of a correction off these concerns. Good rains in Brazil are beneficial to next year’s cane crop, but they limit harvest progress and reduce sugar content in the near term. World Weather Inc said that despite many areas in Thailand, southern Philippines, and neighboring locations receiving less than usual rainfall since the start of the month, there was enough rain to improve the moisture profile in areas that were previously dry. The rain helped support more aggressive growth for sugarcane. Thailand’s output is expected to be down this year because farmers are planting more cassava, but the recent rains at least offset concerns that an El Nino-inspired drought would further reduce output.

COFFEE

December Coffee was lower early Thursday but inside Wednesday’s range. The market had an outside day higher on Wednesday after falling to its lowest level since June 30 earlier in the session, and this may offer the first indication that near term low is in. The market has been under pressure since late August as Brazilian exports have taken off. Earlier concerns that weather in June and July had reduced what had been expected to be a bumper crop abated as export improved. ICE certified arabica stocks were down 2,198 bags on Wednesday to 254,480, and the decline may have also lent support to the market. Stocks have been chopping around since seeing a three daily increases of 10,000-16,000 bags last week. Stocks are up almost 37,000 bags from their 26-year low on September 15 on increases from Brazil. Brazil’s 2027/28 crop is having a good start. Ample rains have induced flowering, and the growing areas appear to be getting good follow-up rains, which is essential for pollination and cherry setting. World Weather Inc. expects scattered showers and thunderstorms to end today with more limited rain and warming temperatures through early next week. Showers and thunderstorms will resume in many late next week, though some of the amounts have been reduced from yesterday’s forecast. On balance, this presents a good mix. Enough rain should in fall in Colombia and western Venezuela to benefit coffee production through the next week. Vietnam is also expected to see regular rounds of showers and thunderstorms during the next week, and coffee development is expected to advance relatively well during this period of time. In Indonesia, unirrigated coffee trees are being stressed by the heat and dryness, and that is not likely to change much in the coming ten days.

COTTON

December Cotton has been in a sideways pattern since a one-day gap higher rally on Monday, but it breached the 9-day moving average for the first time since September 2 early Thursday, which is a bullish technical development. The market may have also found support this week from ideas that the meeting between President Trump and Chinese President Xi this week would product some sort of agreement on Chinese purchases of US agricultural products. Treasury Secretary Bessent did say on Wednesday that the US and China had agreed to extend “the Busan agreement,” to January 10. This is the trade truce that the two nations agreed to last year. The dollar was higher early Thursday, reaching its highest level since July 28, which does not help US export prospects. A strong export sale report this morning could spark a sharp rally.

COCOA

December Cocoa was higher early Thursday, extending a rally off Tuesday’s 2 ½ month low. Perhaps the market got oversold on the recent increase in rain in West Africa, as there is still the possibility that El Nino will reduce moisture over the next several months. World Weather Inc. said scattered and mostly light showers brought beneficial rain to portions of southern and central Ivory Coast on Tuesday. These are areas that had received only spotty rain recently, whereas other parts of West Africa saw better rainfall. More is expected across the entire region over the next week. Southern Ivory Coast and southwestern Ghana need more. Ghana 2025/26 production appears to be better than expected. A Reuters story said that according to a report they reviewed, 2025/26 cocoa production is estimated to have reached about 771,000 metric tons versus an initial forecast by COCOCBOD calling for 650,000 tons. This would be up 28% from 603,840 in 2024/25. Reuters said COCOBOD expects further gains over the medium term. The new, 2026/27 marketing year officially begins on October 1.

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