India Sugar Production Overstated?

SUGAR

March Sugar is a bit higher this morning but inside Friday’s range down. Brazil exported 2.062 million metric tons of sugar in January, down from 3.170 million a year ago. Reuters reported this morning that at least 37 sugar mills in India’s leading cane-producing states halted operations last week, nearly two months earlier than usual, due to lower cane supplies caused by adverse weather, according to an industry official. This suggests that India will produce less sugar than initially estimated. Last month, the Indian Sugar and Bio Energy Manufacturers Association forecasted 2024/25 sugar production at 27.27 million metric tons (down 14.7% from a year ago), but the fast pace of mill closures has traders expecting even lower production. This contradicts the boost in expectations that occurred of larger earlier this year in the wake of the government’s decision to allow sugar exports.

COCOA

May Cocoa was lower overnight but stayed above Friday’s six-week low. Ivory Coast cocoa arrivals totaled 32,000 metric tons for the week ending February 9, down from 47,000 the previous week and 41,000 for the same period a year ago. Cumulative arrivals for 2024/25 have reached 1.322 million tons, up from 1.092 million a year ago up but below the five-year average of 1.415 million. World Weather Service reports that rain fell in portions of Ghana and southeastern Ivory Coast Friday through Sunday. The rain is starting to show up further inland, with most of the computer forecast models hinting of additional rainfall periodically over the next ten days. The rains are welcome. A Reuters poll of traders and analysts on Friday called for a “balanced” market 2024/25 following three seasons of global deficits. Output in top producer Ivory Coast was seen rising to 1.8 million tons this season from an estimated 1.75 million tons in 2023/24. Ghana’s crop was seen recovering to 620,000 tons from an estimated 450,000 tons last season. ICE warehouse stocks fell 61,252 bags on Friday to 1.397 million, their lowest since January 31. Stocks have declined by 13,734 bags over the past four sessions after increasing 146,900 over the previous five.

COTTON

March Cotton is sharply higher this morning and is approaching the February 5^th high. A move through that level would mark a second leg up off the contract lows from February 3. Friday’s Commitments of Traders Report showed managed money traders were net sellers of 8,834 contracts of cotton for the week ending February 4, increasing their net short to 62,407, which was a new record. This has left the market vulnerable to short covering if the psychology shifts and resistance levels are taken out. The trade is not looking for many changes in tomorrow’s USDA supply/demand report. A Bloomberg survey of analysts has an average expectation for US 2024/25 production at 14.41 million bales, which would be unchanged from the January report. Exports are also expected to be unchanged at 11.00 million bales, and ending stocks are expected fall slightly to 4.79 million bales versus 4.80 million in January. World production is expected to come in at 119.53 million bales versus 119.45 million in January, with consumption at 115.80 million versus 115.89 million in January and ending stocks at 77.89 versus 77.91 million in January. World Weather Service said eastern Australia cotton areas may see less heat and some scattered showers and thunderstorms in the next ten days, which may lead to pockets of improved crop and field conditions, especially in unirrigated fields.

COFFEE

May Coffee edged higher overnight to an 11^th consecutive all-time high. Brazil exported 245,281 metric tons of green coffee in January, up from 223,975 tons for the same period last year.  Dealers told Reuters on Friday that the market was keeping a close watch on whether the recent surge in prices for arabica coffee may lead to a reduction in demand. May London (robusta) futures have been trading in a sideways pattern since posting all-time highs on January 31. World Weather Service said Brazilian rainfall was more sporadic and lighter than usual last week and that a similar pattern will continue through the next week to ten days, leading to some net drying. ICE certified arabica stocks increased by 8,185 bags on Friday to 862,738 after falling to their lowest since October 29 on Wednesday.

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