Softs this week settled mixed:Â SBH0 +0.38 (+2.70%), KCH0 -6.80 (-5.72%), CCH0 +208 (+8.03%), CTH0 -.06 (-0.08%).Â
Mar sugar on Friday closed higher and finished the week up +2.70%. Sugar prices rallied sharply this week ad posted a 2-year high Thursday on the outlook for smaller global sugar supplies. Sugar prices found support on smaller sugar output in India, the world’s second-largest sugar producer, after Friday’s data from India’s Sugar Mills Association showed India sugar production from Oct 1-Jan 15 dropped -26% y/y to 10.89 MMT. Unica on Tuesday reported that Brazil’s Center-South sugar production in the second half of December plunged -82.4% y/y to 13,000 MT versus 73,000 MT in the same period last year, although 2019/20 Center-South sugar production through Dec is up +0.53% y/y at 26.481 MMT. The Thai Sugar Millers Corp. is forecasting sugar production in Thailand, the world’s fourth-largest sugar producer, will be less than 12 MMT this year, down more than 14% y/y from 14 MMT last year because of drought and low rainfall in Thailand’s sugar-growing areas.
Mar arabica coffee on Friday sold-off to a 1-3/4 month low and finished the week down by -5.72%. Coffee prices extended their month long decline this week on the outlook for a rebound in Brazil coffee output. On Thursday, Conab, Brazil government’s forecasting agency, said that it sees Brazil 2020/21 coffee production rising to 57.2-62.0 mln bags, up as much as +25.8% from 49.3 mln bags in 2019/20 as the crop moves into the higher yielding half of its two-year cycle. Current coffee supplies are ample after Wednesday’s data from Cecafe, Brazil’s coffee export council, showed that Brazil’s full-year 2019 green coffee exports climbed +14.8% y/y to a record 36.6 mln bags, although those exports in December fell -25.9% y/y to 2.690 mln bags.  Arabica coffee prices are also on the defensive after the Brazilian real fell to a 6-week low against the dollar on Thursday. A weaker real encourages export selling by Brazil’s coffee producers. U.S. coffee supplies remain abundant, which is negative for coffee prices, after Wednesday’s data from the Green Coffee Association showed U.S. Dec green coffee inventories rose +11.0% y/y to 6.805 mln bags. Another bearish factor for arabica coffee was Wednesday’s report from Columbia’s coffee grower federation that said Columbia’s 2019 coffee production rose +9% y/y to 14.8 mln bags and that Columbia’s 2019 coffee exports rose 7% y/y to 13.7 mln bags. Columbia is the world’s second-largest arabica coffee producer. Arabica coffee inventories have recovered recently as ICE-monitored arabica coffee inventories climbed to a 1-1/2 month high Friday of 2.115 mln bags. ICE-monitored arabica coffee inventories had slumped to a 1-1/2 year low of 2.022 million bags on Dec 16.
Mar cocoa prices on Friday surged to a 20-month high and finished the week up sharply by +8.03%. Strong Asian cocoa demand sparked fund buying in cocoa futures after Friday’s data from the Cocoa Association of Asia showed Q4 Asian cocoa processing rose +8.7% y/y to a record 227,013 MT, better than expectations of +7.5% y/y. Cocoa prices also have support after Marex Spectron Group on Thursday raised its global 2019/20 cocoa deficit estimate to -100,000 MT from a previous estimate of -80,000 MT, citing a weaker forecast for cocoa production in West Africa, Ecuador and Indonesia. There was positive cocoa demand news on Tuesday after the Malaysian Cocoa Board reported that Malaysia Q4 cocoa grindings rose +23.3% y/y to 89,358 MT and that total 2019 Malaysia cocoa grindings rose +37.7% y/y to 343,726 MT. Cocoa prices also have support on concern that seasonal Harmattan winds in West Africa will lead to dry conditions that may curb Ivory Coast and Ghana cocoa yields. Satellite imagery data from the U.S. Climate Prediction Center on Monday for Jan 5-11 showed little or no rainfall across most of the Ivory Coast and Ghana. On the negative side for cocoa prices was Friday’s data from the European Cocoa Association that showed Q4 European cocoa processing fell -1.1% y/y to 355,201 MT, weaker than expectations unchanged. Also, the National Confectioners Association reported Q4 North American cocoa grindings fell -5.9% y/y to 110,321 MT, a bigger decline than expectations of -1.9% y/y. Current supplies from the Ivory Coast, the world’s largest cocoa producer, are abundant as the Ivory Coast government on Monday reported that Ivory Coast farmers sent 63,358 MT of cocoa to ports during Jan 6-12, up +4.9% y/y. Also, Ivory Coast farmers sent a cumulative total of 1,314,458 MT of cocoa to ports during Oct 1-Jan 12, up +10.5% y/y. Cocoa inventories in storage have recovered modestly as ICE-monitored cocoa inventories on Friday climbed to a 1-3/4 month high of 3.075 mln bags after they sank to a 3-year low of 2.688 million bags Dec 26.
Mar cotton on Friday closed higher but still finished the week down slightly by -0.08%. Mar cotton fell to a 1-week low Thursday and gave up this week’s gains on disappointment that Wednesday’s phase-one trade deal between the U.S. and China failed to provide specifics for commodity purchases that China will make of U.S. goods, including cotton. Mar cotton rallied to an 8-1/4 month high Monday on speculation the recent phase-one trade deal between the U.S. and China will lead to increased Chinese demand for U.S. cotton. China’s Agriculture Ministry on Jan 10 raised its China 2019/20 cotton import estimate to 1.8 MMT from a prior forecast of 1.6 MMT due to improvement in US/China trade relations. In addition, ICE cotton inventories have fallen sharply over the past six weeks and fell to a 2-year low Wednesday of 6,792 bales. Chinese cotton production has declined after China’s National Bureau of Statistics reported Dec 16 that China 2019 cotton production fell -3.5% y/y to a 2-year low of 5.89 MMT. Cotlook on Dec 20 cut its global 2019/20 cotton surplus estimate to 389,000 MT from a Nov forecast of 636,000 MT. USDA data shows the share of U.S. cotton of China imports fell to 18% in 2018/19 from 45% in 2017/18, well below the 30% share seen over the previous 5 years. The USDA estimates China 2019/20 cotton ending stocks will fall to 7.238 ln bales, an 8-year low, although the USDA projects U.S. 2019/20 cotton ending stocks at 5.40 mln bales, a 12-year high.