Softs this week settled mixed:Â SBN0 +0.09 (+0.87%), KCN0 -4.80 (-4.30%), CCN0 -1 (-0.04%), CTN0 +1.98 (+3.52%).Â
July sugar on Friday rose to a 1-week high and finished the week up +0.87%. Sugar prices found support on a rally in crude oil Friday to a 6-week high, which benefits ethanol prices and may prompt Brazil’s sugar mills to divert more cane crushing toward ethanol production rather than sugar production, thus curbing sugar supplies. Sugar prices still have carry-over support from Wednesday when the CEO of Brazil’s Santos port, Brazil’s biggest port, said that port workers are starting to fall ill from the spread of the coronavirus, which may lead to restricted operations at the port and disruption of sugar exports. In a bearish factor, Unica on Tuesday reported that Brazil’s Center-South sugar production in the second half of April surged +93% y/y to 2.016 MT, with the percentage of cane used for sugar climbing to 45.76% in 2020/21 from 30.87% in 2019/20. Unica on Tuesday also reported that Brazil’s sugarcane-based ethanol sales in April tumbled -32 y/y to 1.78 bln liters. Sugar exporter Alta Mogiana said on Monday that Brazil’s 2020/21 Center South sugar production will jump +37% y/y to 36.67 MMT as the recent plunge in ethanol prices spurs Brazil’s sugar millers to divert 47% of cane juice to produce sugar, up from 34% in 2019/20. Sugar prices continue to be undercut by concern about weaker sugar demand due to the coronavirus pandemic. Researcher Czarnikow on Thursday projected that global sugar consumption will fall 1% this season, the first decline in 40 years, because of lockdowns to stem the spread of the coronavirus.
July arabica coffee on Friday closed slightly higher but still finished the week down -4.30%. Jul arabica coffee posted a 2-week ow Wednesday after Marex Spectron late Tuesday raised its global 2020/21 coffee surplus estimate to +2.0 mln bags from a Feb forecast of +0.5 mln bags, citing slower-than-expected growth in coffee demand due to Covid-19. Dry weather in Brazil is bearish for coffee as it accelerates the pace of the country’s coffee harvest. Somar Meteorologia reported on Monday that rainfall in Minas Gerais, Brazil’s largest arabica coffee growing region, was only 2.5 mm in the last week, or 27% of the historical average. Coffee prices remain under pressure on concern that the pandemic-induced slump in the global economy will reduce coffee demand. Data on May 7 from IRI showed that U.S. sales of coffee at supermarkets fell -20% w/w in the four weeks ended April 19. Arabica coffee prices continue to be undercut by persistent weakness in the Brazilian real. The real on Thursday sank to a record low of 5.970 reals/USD. A weaker real is bearish for coffee since it encourages export selling by Brazil’s coffee producers. A positive factor for coffee was Thursday’s data from RusTeaCoffee Association that showed Russia 2019 coffee consumption rose sharply by +12% y/y to 180,000 MT, overtaking tea consumption for the first time.
July cocoa prices on Friday closed lower and finished the week down -0.04%. Jul cocoa jumped to a 2-month high Tuesday on reduced cocoa shipments from West Africa. The Ghana Cocoa Board on Tuesday reported that Ghana cocoa purchases during Oct 1- Apr 23 were 702,749 MT, down -2.1% y/y. Concerns about supply and transportation disruptions in Ghana, the world’s second-largest cocoa producer, is also pushing cocoa prices higher after Ghana reported the most cases of the coronavirus in Africa. The Ivory Coast government on Monday reported that Ivory Coast farmers sent 31,190 MT of cocoa to ports during May 4-10, down -1.2% from a year earlier. However, longer-term deliveries are bearish with Ivory Coast cocoa farmers delivering 1.92 MMT of cocoa during Oct 1-May 10, up +1.1% y/y. Cocoa prices fell back the rest of the week and finished little changed as adequate rainfall in West Africa should boost cocoa yields and is bearish for prices. Satellite imagery from the U.S. Climate Prediction Center on Monday showed above-average rainfall across most of the Ivory Coast and Ghana during May 3-9. In a bearish factor, cocoa inventories in storage have recovered sharply. ICE-monitored cocoa inventories rebounded to a 9-3/4 month high of 4.347 mln bags on Monday from last December’s 3-1/4 year low of 2.688 million bags.
July cotton on Friday rallied to a 1-3/4 month high and finished the week up +3.52%. Cotton prices trended higher the entire week and closed just under their highs. Cotton rallied on Thursday when the USDA’s FAS projected that India 2020/21 cotton production will fall -2.7%y/y to 28.5 mln bales. Also, the USDA in Tuesday’s monthly WASDE report estimated U.S. 2020/21 cotton production of 19.50 mln bales, below consensus of 20.36 mln bales. The USDA also projects U.S. 2020/21 cotton exports will increase to 16.0 mln bales, above consensus of 15.64 mln bales. In addition, the USDA projects global 2020/21 cotton consumption will increase to 116.46 mln bales, higher than consensus of 112..44 mln bales. On the negative side, the USDA projects global 2020/21 cotton production of 118.95 mln bales, higher than consensus of 118.30 mln bales. Also, the USDA projects global 2020/21 cotton ending stocks will climb to a 5-year high of 99.43 mln bales, well above consensus of 91.29 mln bales. Nearest-futures May cotton slumped to an 11-year nearest-futures low Apr 1 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. 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.