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Softs this week settled mixed:  SBN0 +0.55 (+5.30%), KCN0 -3.25 (-3.04%), CCN0 -5 (-0.21%), CTN0 -0.64 (-1.10%). 

July sugar on Friday closed slightly lower but still finished the week up +5.30%.  July sugar posted a 1-3/4 month high Thursday after crude price rallied to a 2-1/4 month high.  The higher crude prices are positive for ethanol prices and may prompt Brazil’s sugar mills to divert more cane crushing toward sugar production rather than ethanol production, thus boosting sugar supplies.  Sugar prices also have support from reduced sugar production in India, the world’s second-largest sugar producer.  The Indian Sugar Mills Association (ISMA) reported on Monday that India Oct-May 15 sugar output fell -19% y/y to 26.47 MMT.  Thursday’s projections from the USDA’s Foreign Agricultural Service (FAS) were negative for sugar prices since FAS is forecasting that global 2020/21 sugar production will climb +13.2% y/y to 188.1 MMT and that global ending stocks will fall by only -2.0% y/y to 43.55 MMT.  Concern about weak ethanol demand in Brazil also weighed on sugar prices as the coronavirus pandemic ravages the country’s economy.  Brazil is the new hotspot for the coronavirus and trails only Russia and the U.S. in confirmed Covid-19 infections.  Reduced ethanol demand will encourage Brazil’s mills to produce less ethanol and more sugar.

July arabica coffee on Friday tumbled to a3-1/2 month low and finished the week down -3.04%.  Jul arabica coffee retreated on signs of robust global supplies.  Rabobank on Thursday raised its coffee surplus forecast for 2019/20 to 2.6 mln bags from 1.6 mln bags and for 2020/21 to 7.6 mln bags from 5.6 mln bags, citing the negative impact of the pandemic lockdowns on coffee consumption.  Arabica coffee prices were undercut by the forecast on Thursday by the USDA’s Foreign Agricultural Service (FAS) that Colombia’s 2020/21 coffee production will climb +2.2% y/y to 14.1 mln bags and that Colombia’s 2020/21 coffee exports will climb +4.5% y/y to 13.5 mln bags.  Colombia is the world’s second-biggest producer of arabica coffee beans.  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 8.2 mm in the last week, or 57% of the historical average.  

July cocoa prices on Friday fell to a 3-1/2 week low and finished the week down -0.21%.  Jul cocoa recovered most of this week’s losses on a bullish forecast from Fitch Solutions.  Fitch expects the global cocoa market to tighten in 2019/20 because of slowing cocoa output growth in Ivory Coast and falling output in Indonesia and Ghana.  Fitch also expects global demand growth to stay positive, despite the coronavirus pandemic, due to excellent demand growth in Asia cocoa and stronger growth in Europe.  Recent rainfall in West Africa was adequate and undercut cocoa 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 10-16. In a bearish factor, the Gepex cocoa exporters group, a group of the six biggest cocoa grinders, reported on Monday that it processed 45,574 MT of cocoa in April, down -3.2% y/y.  Smaller supplies from West Africa are supportive for cocoa prices after the Ivory Coast government on Monday reported that Ivory Coast farmers sent 29,838 MT of cocoa to ports during May 11-17, down -0.8% from a year earlier.  However, longer-term deliveries are bearish with Ivory Coast cocoa farmers delivering 1.95 MMT of cocoa during Oct 1-May 17, up +1.0% y/y.  Also, the Ghana Cocoa Board on Monday reported that Ghana cocoa purchases during Oct 1- Apr 30 fell -2.2% y/y to 710,276 MT.  Concerns about disruptions in cocoa production and transportation in Ghana, the world’s second-largest cocoa producer, have been supportive for cocoa prices since Ghana has reported the most cases of the coronavirus in Africa.

July cotton on Friday fell to a 1-week low and finished the week down -1.10%.  Cotton prices retreated as ramped up U.S./China tensions sparked concern over Chinese demand for U.S, cotton.  Cotton prices had climbed to a 2-1/4 month high Wednesday on concern about global cotton production.  The USDA’s FAS on May 14 projected that India 2020/21 cotton production will fall -2.7%y/y to 28.5 mln bales.  Also, the USDA in the May 12 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 ending stocks will climb to a 5-year high of 99.43 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.  On the positive side, the USDA estimates that Chinese 2019/20 cotton ending stocks will fall to an 8-year low of 7.238 mln bales.

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