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Global Sugar Production on the Upswing


May sugar bounced overnight after falling to its lowest level in a year yesterday. At yesterday’s low the market had fallen 16% since April 2, which left it in an oversold situation and due for a bounce. Sugar has been pressured by stronger than expected production in India and Thailand in the later stages of the 2023/24 crop year. Speaking at a company-sponsored event in Geneva, a representative of S&P Global said the company expects global sugar production to exceed consumption by 5.6 million tonnes in 2023/24, due to the strong finish in India and Thailand. He also stated that Brazilian cane crushing has “started on a good note,” but that about 598 million tonnes of cane will be available for crushing in 2024/25, down from 654 million last year. Brazil’ sugar output is expected at 41.4 million tonnes, down 1 million from last year. Thailand’s sugar output is expected to recover to 11.8 million tonnes from an 8.8 million estimated for 2023/24. China imported 10,000 tonnes of sugar in March, down 83.8% from a year ago. Total imports for 2024 have reached 1.2 million tonnes, down 27.1% from a year ago.

sugar cubes


The cocoa market was higher overnight on better than expected first-quarter grinding numbers from Asia and Europe. Asia’s first-quarter grind fell 0.2% year on year to 221,530 tonnes versus reported trade expectations for an 8% decline. EU grind was down 2.2% to 367,287 tonnes, versus expectations for a 3-6% decline. Germany’s grind was up 3.9% to 105,900 tonnes. July cocoa was higher on the news but was still holding below this week’s highs. Next up is the North American grind data, which will be released after the close. The trade is reportedly looking for a 4-8% decline. So far, the grind data appears to be better than expected, and the market has responded bullishly. This could be because demand has been less affected by high prices than thought, but it could also mean that supplies are somewhat better than feared.


The rally in the coffee market continues with no top in sight despite a short-term overbought technical condition. July NY coffee traded to a new contract high overnight, and London robusta reached another new all-time high. A dry weather pattern in Vietnam this spring that is comparable to last year has traders concerned that that nation’s 2024/25 (robusta) output will be even lower than 2023/24, which is expected to be the lowest in four years and down 8.6% from 2022/23. The flareup in tensions between Iran and Israel over the weekend has added to concerns about shipping disruptions through the Red Sea. ICE exchange arabica stocks rose by 7,375 bags yesterday and were more than 35,000 bags above where they were at the end of March, leaving them on track for a fourth straight monthly increase.


The selloff in the cotton market continues, on what appears to be spec long liquidation. July cotton fell to its lowest level since December 22 yesterday and was slightly lower again overnight. Open interest has dropped sharply since the beginning of the month, as the market has repeatedly fallen below technical support levels. Soil moisture conditions in the US look favorable for this year’s crop, and the trade expects the US to see strong competition in the export market from Brazil and Australia. The dollar has eased back since Monday, but this was after it reached its highest level since October, and this does not help US export prospects. The trade is probably not expecting much improvement in today’s export sales report. After being very strong for several weeks, shipments fell to their lowest level since February 22. Cumulative sales had reached 95% of the USDA forecast for the marketing year versus a five-year average of 101% for this point in the marketing year.


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