Softs last week settled mixed:Â SBK0 -0.79 (-7.12%), KCK0 -0.95 (-0.82%), CCK0 +7 (+0.31%), CTK0 -0.35 (-0.68%).Â
May sugar on Friday closed higher, but still finished the week down -7.12%. May sugar slumped to a 1-1/2 year nearest-futures low Wednesday on demand concerns.  Sugar prices were undercut on Tuesday when the CEO of the world’s top sugar trader Alvean said that Brazil’s Center-South sugar production for 2020/21 (Apr-Mar) may approach the record 36.06 MMT posted in 2017/18 as the slump in ethanol prices prompts mills to process more sugar versus ethanol. Persistent weakness in the Brazilian real against the dollar is a major bearish factor for sugar prices. The real on Friday fell -1.18% against the dollar and posted a new record low of 5.3225 reals/USD. A weaker real encourages export selling by Brazil’s sugar producers. Sugar prices continue to be undercut by concern about weaker sugar demand due to the coronavirus pandemic. Researcher Czarnikow on Mar 24 cut its global sugar consumption estimate for this year by -2.0 MMT, citing a collapse in out-of-home food and drink consumption due to the closure of restaurants because of the coronavirus pandemic. A positive factor for sugar is concern about supply disruptions in India. The ISMA reported Wednesday that sugar production in India, the world’s second-largest sugar producer, dropped sharply by -22% y/y to 23.27 MMT during Oct-Mar. Â
May arabica coffee on Friday closed lower and finished the week down -0.82%. May coffee fell to a 2-week low Wednesday and remain under pressure on persistent weakness in the Brazilian real. The real on Friday fell by -1.18% against the dollar and posted a new record low of 5.3225 reals/USD. A weaker real encourages export selling by Brazil’s coffee producers. Coffee prices continue to be undercut as the coronavirus spreads globally and has forced the shutdown of many restaurants, cafes, and bars around the world. The International Coffee Organization (ICO) on Friday slightly reduced its global 2019/20 coffee deficit estimate to -474,000 bags from a Feb estimate of -476,000 bags. ICO also said that weak global economic growth this year and rising unemployment will reduce coffee demand and put downward pressure on coffee prices. Another negative for coffee is drier weather in Brazil that may allow rain-soaked coffee farms to dry out from recent heavy rains. Somar Meteorologia today reported that rain in Minas Gerais, Brazil’s largest arabica coffee-growing region, was 1.2 mm in the past week, or only 4% of the historical average. A positive factor for coffee prices was Friday’s data from the Colombia Coffee Growers Federation that showed Colombia Mar coffee production fell -12% y/y to 806,000 bags and that Mar coffee exports fell -21% y/y to 903,000 bags. Colombia is the world’s second-largest producer of arabica coffee beans.
May cocoa prices on Friday closed lower but still finished the week up +0.31%. Weak export data from Cameroon is positive for cocoa prices after the Cameroon Ports Authority on Thursday reported that Cameroon Mar cocoa exports plunged -48% y/y to 444 MT. NY cocoa earlier in the week on Wednesday fell to a 1-week low on ample cocoa supplies. The Ivory Coast estimated Wednesday that its cocoa farmers delivered a record 1.76 MMT of cocoa in its 2019/20 main crop (Oct-Mar), up +5.4% y/y. Also, cocoa output in Ghana, the world’s second-largest cocoa producer, is ample after the Ghana Cocoa Board reported Wednesday that it purchased 685,032 MT of cocoa from farmers during Oct 1-Mar 12, up +1.0% y/y. The coronavirus pandemic is undercutting cocoa demand as the global lockdown of millions of people curbs demand for chocolate and other cocoa products. Research firm IRI on Wednesday reported that U.S. chocolate sales slumped -13% in the four weeks ended March 22. Also, cocoa processing demand in Q1 may decline as some cocoa grinders see pandemic-related business disruptions. Another bearish factor for cocoa prices is abundant rainfall in West Africa that may boost cocoa yields. Monday’s data from the U.S. Climate Prediction Center showed above-average rainfall during Mar 22-28 across most of West Africa.
May cotton on Friday closed higher but still finished the week down -0.68%. May cotton sold off to an 11-year nearest-futures low Wednesday after the International Advisory Cotton Committee said with millions of people in Asia in self-isolation, the cotton and textile business is at a virtual standstill. Also, Tuesday’s USDA Planting Intentions was bearish as it showed U.S. 2020 cotton planting intentions on 13.7 mln acres, unch from 2019 and more than expectations for a decline to 12.4 mln acres. Cotlook on Mar 27 raised its 2019/20 global cotton surplus estimate to 2.82 MMT from a previous forecast of 832,000 MT as the coronavirus pandemic decimates cotton demand. China’s economy is seeing significant damage from the quarantining of large swaths of China’s population and large-scale business shutdowns, as many China cotton mills remain closed due to a lack of workers, which will further crimp China’s demand for cotton. Another bearish factor was the Feb 18 forecast from the Cotton Association of India that 2019/20 cotton production in India, the world’s biggest cotton producer, may climb +13.6% y/y to 35.45 mln bales. Chinese cotton production has declined as China 2019 cotton production fell -3.5% y/y to a 2-year low of 5.89 MMT. The USDA estimates that Chinese 2019/20 cotton ending stocks will fall to an 8-year low of 7.238 mln bales.