Summary
Sugar is the one to watch this week. The market rallied off the weather in Brazil and the lower sugar output data, with No.11 settling around 20.86 c/lb on Monday. The heavier rains are delaying harvest, reducing cane deliveries to mills and lowering ATR. The cane that does get to the mills has been diverted into ethanol, even despite sugar paying more. More cane risks being left in the fields and pushed into the 2027/28 harvest, and there are now talks that Brazil may not even reach 38 MMT production.
The top three are still in very delicate situations. India and Thailand are coming off poor rainfall seasons, and minor players do not look able to supplement the wider sugar deficit. We have not seen many bearish fundamental signals, and we think it is going to run again and run hard.
El Nino is the thread running through the rest of the softs too. Central American coffee prices are becoming more interesting and could be an early sign of El Nino impacts, while in cotton, the drop in price could accelerate into year-end if the broader Ags/inflation/El Nino trade begins to unwind. And cocoa won’t stay directionless for long, with the Q3 grindings report landing on 15 October.
Chart of the Week - Price Levels & Structure
Spot Silver
After the precious metals’ historic run to $120 peaked at the turn of 2026, what has transpired since then has been frustrating for bulls. However, they can take heart that this choppy price action over the last year can be counted as a bullish falling wedge. Moreover, the market appears to have
printed an ABC Elliott Wave structure to complete a large degree wave 4 in July. Since then, we’ve seen a five wave rally followed by an overlapping ABC correction. This sets silver up for higher levels into 2027, quite possibly even breaching the $120 bull market high. Watch for a strong move up in wave (iii) in silver over the coming months.
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