Coffee and sugar surge see softs on top in January Coffee and sugar surge see softs on top in January Coffee and sugar surge see softs on top in January

Coffee and sugar surge see softs on top in January

Ole Hansen

Head of Commodity Strategy

Summary:  While copper and gold, stole much of the attention last month, a late surge in coffee and sugar helped drive the BCOM Softs Index to an 8.6% gain, driven by weather relatet supply worries and excessive speculative short positioning being forced to take cover

Today's Saxo Market Call podcast.
Today's Market Quick Take from the Saxo Strategy Team

While copper and iron ore, as well as gold, stole much of the attention last month, a late surge in coffee and sugar helped drive the soft sector to the pinnacle. The Bloomberg Softs index, which also includes cotton, ended up 8.6% last month while the industrial metal sector which had led from the front all month was beaten into second spot with an 8.1% gain with precious metals in a distant third at 4.4%. The reason why the Bloomberg Agriculture Index only managed an overall 2% gain was due to weakness across the grain sector which is by far the biggest component of that index.

Coffee surge led by Robusta

Arabica and Robusta coffee futures in New York and London recovered strongly to reach a three-month high on rising concerns the world may see a third consecutive deficit, led by a shortage of Robusta beans. Hence the reason why recent gains have been led by Robusta which following a second half slump last year went on to recover strongly last month, primarily driven by supply concerns. ICE monitored Robusta stocks have falling to 6,182 contracts or 61,820 tons, the lowest level since 2016 when contract rules were changed. In addition, Vietnam’s Statistics Office reported that exports from the world’s second biggest exporter of coffee, primarily Robusta, sank by 31% year-on-year in January to 160,000 tons. This coming on top of a forecast from coffee trader Volcafe, that the global 2023/24 Robusta market could see a record deficit of 5.6 million bags as Indonesia, the world’s 3rd largest producer is expected to see their 2023/24 production fall to a 10-year low due to damage caused by excessive rain.

Arabica coffee meanwhile jumped 6.7% on Tuesday, thereby increasingly signaling an end to the month-long correction which saw the price slump by 40% between August last year and January 11. Since then, the futures price has surged higher by 29% to reach a three-month high at $1.82/lb. The fundamental driver being a deteriorating outlook for coming season in Brazil with forecasts pointing to a small 2023 crop for the 3rd year in a row. Delayed harvests in Central America and worries about Peru’s next crop amid political unrest have added further upward pressure on the price. 

Developments that have forced a major turnaround from hedge funds who in recent weeks have amassed the biggest net short in more than three years. It highlights the importance of watching the weekly COT update as a change in the technical and/or fundamental outlook can have an outsized price impact when positions are elevated.

Raw sugar hits six-year high

Global supply concerns remain the key driver behind sugar's recent rapid ascent. It culminated on Tuesday when the March futures contract in New York ended the month at 21.81 cents a pound, the highest for the front month or most-active traded contract since November 2016. The latest run up in prices was driven by news from India, the world’s second-biggest grower, after the Indian Sugar Mills Association reduced its estimate for the country’s output this season by 6.8% to 34 million tons. A development that is likely to reduce exports to a total of 6.1 million tons from 9 million previously forecast. Adverse weather and mills diverting more cane toward ethanol being cited as the main reasons behind the reduction, adding to concerns that India’s government may curb exports in order to safeguard domestic supply and ensure prices remain stable. 


Source: Saxo

The Saxo Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
- Notification on Non-Independent Investment Research (
- Full disclaimer (

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments. Saxo does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment made in reliance of this presentation. Any opinions made are subject to change and may be personal to the author. These may not necessarily reflect the opinion of Saxo or its affiliates.

Saxo Capital Markets HK Limited
19th Floor
Shanghai Commercial Bank Tower
12 Queen’s Road Central
Hong Kong

Contact Saxo

Select region

Hong Kong S.A.R
Hong Kong S.A.R

Saxo Capital Markets HK Limited (“Saxo”) is a company authorised and regulated by the Securities and Futures Commission of Hong Kong. Saxo holds a Type 1 Regulated Activity (Dealing in Securities); Type 2 Regulated Activity (Dealing in Futures Contract); Type 3 Regulated Activity (Leveraged Foreign Exchange Trading); Type 4 Regulated Activity (Advising on Securities) and Type 9 Regulated Activity (Asset Management) licenses (CE No. AVD061). Registered address: 19th Floor, Shanghai Commercial Bank Tower, 12 Queen’s Road Central, Hong Kong.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Trading in leveraged products may result in your losses exceeding your initial deposits. Saxo does not provide financial advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo does not take into account an individual’s needs, objectives or financial situation. Please click here to view the relevant risk disclosure statements.

The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit

The information or the products and services referred to on this site may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and services offered on this website are not directed at, or intended for distribution to or use by, any person or entity residing in the United States and Japan. Please click here to view our full disclaimer.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the US and other countries. AppStore is a service mark of Apple Inc. Android is a trademark of Google Inc.