Brazil Sugar Production Stronger than Expected

SUGAR

March Sugar was lower overnight on an extension of Friday’s selloff from a higher than expected sugar production for the first half of October. Additional pressure overnight came from sharply lower crude oil prices. Center-south Brazil saw moderate rainfall over the weekend with some locally heavier amounts, especially northern Sao Paulo, and this does improve the outlook for next year’s crop. The recent trend of increased rain marks a significant change from the extended drought this year. Friday’s Unica report on Brazil Center-South sugar production showed sugar production for the first half of October at 2.443 million metric tons, down from 2.823 million for the second half of September but up 8.0% from the same period a year ago. The marks a recovery from second-half September, when production was down 16.4% from a year ago. Cumulative production for the 2024/25 marketing year is up 1.9% from last year versus +1.5% as of October 1.

COFFEE

December Coffee was sharply higher overnight, taking back most of its losses from the reversal lower on Thursday. Recent rainfall in Brazil has improved the outlook for 2025 production, but the possibility of extensive tree damage from the extended drought is still a concern. Coffee growing areas received moderate rainfall over the weekend, with some areas of Minas Gerais seeing heavier amounts of up to 45 millimeters. Brazil has been getting favorable to excessive moisture recently, something that has not been seen in many years. London robusta coffee was also higher overnight following a move to its lowest level since August 16 on Friday. There were reports late last week that Vietnam’s October rainfall had fallen below average, which was less than ideal for crop development. There were also reports that Vietnam’s harvest was delayed, and that was attributed to a degree to farmers using new varieties that ripen later.

COTTON

December Cotton was lower overnight and was approaching the October 17 low. The market has fallen for three straight sessions. Recent weather in the Delta and the southeastern states has been favorable to crop development and harvest ever since the hurricanes swept through the region and caused damage. Last week’s Crop Progress report showed 44% of the US crop had been harvested, and this afternoon’s report is expected to show good progress. Last week’s export sales report showed decent sales for the second straight week, but they are still running well below normal. Sharply lower crude oil prices may have added additional pressure to cotton overnight because lower oil prices make man-made fibers less expensive to produce.

COCOA

December Cocoa was higher overnight after a steep selloff last week that did some technical damage. The market fell to its lowest level since July 2 on Friday but was up more than $500 off Friday’s lows this morning. There was a report on Reuters over the weekend saying that pod counters in Ivory Coast had lowered their expectations for the main crop after too much rain this month has caused larger flower and cherelle mortality in their October counts versus September and August. World Weather Service expects west African rainfall to be on the light side this week, perhaps increasing next week. Most cocoa areas will see some rain at one time or another, but the daily precipitation should be somewhat sporadic and light. This lower rainfall may ease concerns somewhat, but sun would be appreciated. The main crop harvest in Ivory Coast appears to have gotten off to a strong start, with arrivals at Ivory Coast ports for the week ending October 20 totaling 93,000 tons, which brought cumulative arrivals since the marketing year began on October 1 to 193,000 tons, up 13.5% from last year.

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