Well, it seems like you have done everything right so I am baffled. It does look like severe sunburn which is rather odd in morning sun.... hmmm... does the burn do all the way around the cutting?? If it does, you will need to re-cut above the damage and start over. In fact, even if it doesn't you may still want to start over. Maybe others will chime in with another option.

Good luck..

I have 1 that looked just like this last year...ended up it was a snail.....ggggrrr...roxanne

I would have guessed snail also, looks like what one did to my desert rose last year. Hope it gets better for you.

I have never had snail damage so really could not compare but it sure does look like sunburn to me. Perhaps the glazing on the pot was focusing heat right there. You could use the cardboard core of a paper towel roll or aluminum foil to cover it. Good luck with it.

Really looks like a very bad case of sunburn, just judging from that picture. Cuttings that are rooting (just starting) should never be in the sunlight, only open shade, as they have no roots yet to take up water. There also appears some kind of brown in the upper left corner of that pic around the side of the stem also.

Thanks everyone! Yeah, I was assuming sunburn because that was the only thing I could think of, but I couldn't explain why it only went up an inch or so. Sorry, that first picture didn't show it, but the brown in the upper left is just a support stick. I never would have thought about snails, but that sounds very likely to me because it really does look like something ate a big chunk out of it. That would explain why it's only on one side (snail couldn't access the side against the stick) and why it is only as big as it is. And also why it seemed to show up overnight and why only 1 in my 16 cuttings has this. I'll definitely put out some snail bait and keep them in less sun!

It could have been sun reflecting off the soil also as that area is right at the soil level. If it was snails, there should be some kind of slime trail up the side of the pot.

Looks like sunburn to me. If it was a snail then the outer skin woul not still be present on the cutting. Sunburn also usually only occurs on one side where the sun hits it.

-Jennifer