Sugar Market Continues to Give Back Gains

COCOA

It may be difficult to press the cocoa market too far down until or unless the main crop comes in as strong as hoped. December Cocoa was higher overnight, as it attempted a recovery from last week’s selloff. World Weather Service expects a daily or near-daily occurrence of showers and thunderstorms through the next week in west-central Africa. The daily rainfall will vary widely, but all areas will receive rain at one time or another with sufficient amounts to maintain moisture abundance in most areas. Grower comments have been mostly positive through the season, but too much rain could cause disease problems. Not surprisingly, candy makers are pushing fewer chocolates and more non-chocolate candies this Halloween season. Brazil’s cocoa grind fell 13.5% year on year in the third quarter to 55,300 metric tons, according to industry group AIPC, citing weaker demand and poor quality. Cocoa arrivals at processing plants fell 4.3% year on year to 66,000 tons. European, North American, and Asian grind figures are due to be released on October 17.

COFFEE

December Coffee was higher overnight on follow-through from yesterday’s recovery. The market has been under pressure over the past week or so as rainfall has finally started showing up in the Brazilian weather forecast, but the selling eased this week as it awaited verification that the drought was finally ending. World Weather Service expects showers and thunderstorms pop up occasionally through the balance of the week and to increase next week, which should be enough to induce flowering in most of Brazil’s coffee growing areas. The  opportunity for showers and thunderstorms are expected to continue periodically into late this month, which will be important for crop development once flowering occurs. Colombia produced 1.07 million bags of washed arabica coffee in September, up from 849,000 for the same month last year, according to their National Coffee Federation. Exports in September totaled 987,000 bags, up from 840,000 a year earlier.

COTTON

December Cotton is chopping around unchanged levels this morning after its steep selloff yesterday to its lowest levels in two weeks. Damage from Hurricane Helene has lowered expectations for the US crop, but demand concerns remain. Hurricane Milton presents a far less threat than Helene did, as it is expected to miss most of the main cotton growing areas. The northern peninsula of Florida and southeastern Georgia could see heavy rains. Most other US cotton areas look dry for the next nine days, which will be good for crop maturation and harvest. The cotton market was pressured yesterday on disappointment with China’s announcement of new fiscal stimulus, which was lacking in detail. However, China’s finance ministry said overnight that it will provide details on its plans at a news conference on Saturday, which may have sparked new hope for Chinese demand.

SUGAR

March Sugar sold off overnight to its lowest level since September 19, as the market continues to give back the gains it received from concerns over Brazil’s drought. Center-South Brazil has seen some rain recently, and the forecast calls for a gradual increase over the second half of this month. The rainy season, which traditionally begins in September has been slow to arrive this year, exacerbating the extreme dry conditions from earlier this year. Reports this week that the German beet sugar production is expected to be up 17% from last year have added to the negative mood. The USDA lowered its forecast for Brazilian 2024/25 sugar production to 43 million metric tons from 44 million previously and 45.5 million in 2023/24. This was not a surprise given the dire prediction for their crop this year.

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