Freeze Threat Fails to Lift Sugar

SUGAR

March Sugar was lower early Wednesday and still inside the trading range of the past few weeks. The extreme cold this week could damage the Louisiana cane crop, but so far the market has not responded. The sugar futures reflect a world price, which is not directly affected by US production, but it could make a difference on the margins if the US sugar production drops low enough to allow more imports. It will take some time to determine the extent of the damage. Very cold temperatures are expected to reach cane growing areas of Florida this weekend, which could damage the crop there as well.

COFFEE

March Coffee was lower early Wednesday and gave back much of Tuesday’s gains. The Brazilian real reached its highest level against the dollar since May 2024 on Tuesday, and this discourages Brazilian roasters from selling their product for export. Safras & Mercado recently reported that Brazilian growers had sold 76% of their 2025/26 crop as of January 20 versus 85% a year prior, but much of this was blamed on the US tariffs this past fall. Global supplies remain on the tight side following an off year for Brazilian production. The 2026/27 Brazilian crop looks larger owing to generally decent weather so far and the fact that it is an “on-year” in the nation’s biennial cycle. However, one agronomist told Reuters this week that that some producers are reporting that the sprouting of pruned coffee plants is not very good, possibly due to the uneven distribution of rainfall this month. Crop watchers stress that it is still early enough in the season for things to go wrong. Harvest begins in April or May. World Weather Inc. said that rain in Brazil coffee areas lightened up considerably early this week after abundant rains last week and over the weekend. They said break was welcome for plantation activity and crop development. They also look for a rains to return Thursday and last through the weekend, and they expect the greater precipitation distribution to prevail through most of next week.

COCOA

March Cocoa was lower early Wednesday and was in the vicinity of Friday’s contract lows. The selling pressure does not appear to have eased despite a technically oversold condition. There have been reports of cocoa beans are backing up in Ivory Coast warehouses, with some 123,000 tons reported so far and that number expected to rise. The Ivory Coast government said it intends to help the nations cocoa regulator, the CCC, negotiate a $500 million loan to purchase about 100,000 tons of beans from farmers. Traders also report that the quality of stocks is beginning to deteriorate and that some processors are underpaying for beans below the farm gate price. Bloomberg reported that cocoa is also piling up in warehouses across Nigeria as owners hold back sales in hopes prices will recover. In Cameroon, shipments in January are expected to fall 50% from a year earlier as week, said Michael Ndoping, the director general of the country’s Cocoa and Coffee Board. An Ivorian cocoa farmers union had planned a protest to denounce lack of demand for beans, but CCC filed a court complaint, accusing the union of slander, defamation and contributing to declines in international cocoa prices. The weather has turned seasonably dry in West Africa. The Harmattan wind is picking up, but so far it has been mild.

COTTON

March Cotton extended Tuesday’s short-covering rally early Wednesday and reached its highest level in a week. The trend of lower lows and lower highs continues, as traders do not see much of an opportunity for the market to rally, but each new lows seems to be met with a violent reversal, as if traders expects buyers to step in when prices fall. The selloff in the dollar should encourage export sales, but until yesterday that did not seem to off much encouragement. Perhaps with the nearby Dollar Index falling to its lowest level in almost four years on Tuesday these buyers finally stepped in. Two weeks of solid export sales have not provided much support up until now either. Cumulative sales are still very weak and have not even kept pace with the USDA’s already low forecast, but sales at 438,932 bales in last week’s report and 348,844 the week before help. World Weather Inc. looks for a drier weather pattern over the next two weeks and steady evaporation of the moisture from the weekend storm. The trade will also be watching for progress of the “Buying American Cotton Act,” a bipartisan bill introduced last week that would create a tax credit to support the use of US-grown cotton.

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