Raw sugar futures on ICE closed higher on Friday, rebounding from a four-week low hit on Thursday. The market's recovery was attributed to dealers considering ample near-term supplies as already priced in. Meanwhile, coffee and cocoa prices saw declines amid varying market conditions.
Raw sugar settled up 0.13 cent, or 0.9%, at 14.06 cents per lb, after hitting its lowest level since late April on Thursday. Despite the recovery, the market experienced a 4.3% loss over the week. Brazil's strong sugar harvest start raised questions about the sustainability of its current production pace, while concerns over India's monsoon impact lingered. India forecasts an El Niño-weakened monsoon in 2026, potentially leading to the lowest rainfall in 11 years, affecting crops and food prices. White sugar prices also rose, increasing by 2.9% to $438.20 per metric ton.
Arabica coffee prices fell by 8.65 cents, or 3.2%, to $2.656 per lb, reversing a 1.6% gain observed on Thursday. A reduction in coffee exports from Colombia, the second-largest arabica grower, has tightened market conditions, although a bumper harvest in Brazil is expected to improve supply. However, the harvest pace in Brazil has been slow, and certified arabica stocks have dropped to their lowest since February, at just over 435,000 bags. Robusta coffee prices also declined by 1.5% to $3,501 per ton.
London cocoa prices decreased by 112 pounds, or 3.6%, to 2,975 pounds per ton, following a 1.4% drop on Thursday. Despite this, the market gained 4% over the week. New York cocoa prices fell by 4.3% to $3,923 per ton, with technical analysis suggesting a potential retracement to $3,919 per ton.
The sugar market's recovery comes amid a backdrop of declining oil prices due to a possible U.S.-Iran ceasefire extension. Higher energy prices typically encourage cane mills to produce more ethanol, reducing sugar output.
Background
The sugar market's fluctuations are influenced by global weather patterns and geopolitical developments. Brazil's role as the top sugar producer and India's significant contribution to global supply make their agricultural conditions critical to market dynamics. The potential impact of an El Niño event on India's monsoon could have far-reaching effects on food prices and economic growth.
Looking ahead, market participants will closely monitor weather developments in India and the pace of Brazil's harvests, which could significantly impact global sugar and coffee supplies.
