Early Indian Monsoon Points to Strong Cane Crop

SUGAR

July Sugar failed an attempt at a rally yesterday and was back approaching the lows from earlier this month overnight, but traders may be reluctant to push prices too much lower ahead of the UNICA report on Brazilian Center-South sugar production for the first half of May, which his due out this week. A survey of 23 analysts by S&P Global calls for crushing to be down 9.9% from a year ago and sugar production down 11.5% to 2.29 million metric tons. This would put the cumulative crush for 2025/26 down 25% from last year. The marketing year began on April 1. The cane harvest was just getting underway, and it tends to peak in the second half of July. The last report, which covered the second half of April, showed cane crush down 49% from a year ago and sugar production down 54%. Judging by the market’s action, it does not appear that traders are too concerned about the prospects of low production from Brazil at this point. The early arrival for the Indian monsoon points to a strong cane crop there. The Indian government is calling for monsoon rains to be 106% of the long term average this year, the second straight year they would be above average. The India Meteorological Department defines average or normal rainfall as ranging between 96% and 104% of a 50-year average 35 inches for the four-month season from June to September.

COFFEE

July Coffee was lower overnight following a slight rally yesterday, but so far it has held Friday’s low. Technical indicators point to an oversold condition, and it is possible that the “harvest pressure” theme has run its course for the time being. Yesterday, Brazilian consultancy Pine Agronegocios commented that the arabica harvest is running behind the normal pace as farmers wait for beans to mature. Their robusta harvest started earlier, but it could have gotten interrupted by rains in Bahia and Espirito Santo over the weekend. ICE certified arabica stocks increased by 5,878 bags yesterday to 892,468, the highest since January 29.

COCOA

July Cocoa extended its decline overnight after a brief recovery yesterday off reports of lower Ivory Coast arrivals last week, as traders appeared to willing to put aside those concerns given the adequate rainfall pattern. Ivory Coast grind data showed a total of 38,169 metric tons ground for April, down 7% from the same period last year. Total grind since the 2024/25 marketing year began in October reached 389,656 tons, down 0.2% from a year ago. Ivory Coast’s total grinding capacity is 712,000 tons, and they vie with Netherlands as the world’s top grinder. This lower grind may reflect a drop in demand in reaction to high prices, but it also may be the result of tight supply. West African weather has been generally supportive to crop development, with enough rain to support growth.

COTTON

July Cotton rallied yesterday but failed to push through the 50-day moving average, closed lower, and was lower again overnight. The Crop Progress report released after the close yesterday showed US plantings slipping further behind, primarily due to heavy rains and wet soils in the Delta, but that offered little support, as the crop may not be far enough behind to overcome concerns about demand. The progress report showed 52% of the US crop was planted as of May 25, down from 57% a year ago and below the five-year average for this date of 56%. Most of the major states are behind average. Mississippi is only 43% planted versus a five-year average of 77%, which is about 12-13 days behind. Alabama is about 8 days behind, and it saw no increase in plantings last week. Alabama saw no increase last week.  The Delta may have too much rain, and West Texas could use some. India’s government is forecasting above average rains for this year’s monsoon, which should be good for cotton production.

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