Softs last week settled mixed:  SBH0 +0.22 (+1.53%), KCH0 -7.50 (-6.81%), CCH0 +44 (+1.61%), CTH0 -1.90 (-2.74%). 

Mar sugar on Friday settled slightly higher and finished the week up +1.53%.  Sugar prices have rallied sharply over the past three weeks with NY sugar climbing to a 2-year high on Jan 23 on aggressive fund buying due to the outlook for smaller global sugar supplies.  India’s Sugar Trade Association on Friday reported India 2019/20 sugar production may fall -17% y/y to 27.4 MMT.  Also, on Friday, Mexico’s sugar production during Oct 1-Jan 25 fell -24.9% y/y to 1.375 MMT, according to Conadesuca.  Signs of lower sugar output from Brazil, the world’s biggest sugar producer, has been supportive.  Unica reported on Monday that Brazil’s Center-South sugar production in the first half of January plunged -66.0% y/y to 4,000 MT versus 13,000 MT in the same period last year, although 2019/20 Center-South sugar production through mid-Jan rose +0.5% y/y to 26.485 MMT.  A bearish factor for sugar prices was Friday’s plunge in the Brazilian real to a record low of 4.2856 real/USD.  The weaker real encourages export selling by Brazil’s sugar producers.  Also, crude oil on Friday fell more than -1.0% to a new 3-1/2 month low, which undercuts 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. 

Mar arabica coffee on Friday posted a 3-month low and finished the week down by -6.81%.  Coffee prices have trended lower over the past six weeks on increased supplies and demand concerns.  Meteorological Consultant Rural Clima said Thursday that Brazil’s coffee crops face “exceptional” conditions for development amid both frequent showers and sunshine this week.  Brazil coffee exporter Coexim on Tuesday projected that Brazil’s 2020/21 coffee crop will climb +19.2% y/y to a record 67.7 mln bags, above forecasts of 62 mln bags from Conab, Brazil government’s forecasting agency.  Also, ICE-monitored arabica coffee inventories on Thursday climbed to a 2-1/4 month high of 2.179 mln bags, recovering from the mid-Dec 1-1/2 year low of 2.022 million bags.  Demand concerns are also weighing on coffee prices due to the spread of the Chinese coronavirus.  Starbucks said it has closed more than half of its stores in mainland China, about 2,000 stores, and McDonald’s has closed several hundred stores in China due to the virus, which is negative for coffee demand.  Increased global coffee supplies are weighing on prices after Uganda, Africa’s biggest coffee exporter, said Wednesday that Uganda 2019/20 coffee production (Aug-Sep) may climb +9% y/y to 7.1 mln bags due to beneficial growing conditions.  Another bearish factor for arabica coffee is above-normal precipitation in Brazil after Somar Meteorologia on Monday said that rainfall in Minas Gerais, Brazil’s largest arabica-coffee growing region, measured 61.7 mm in the past week, or 112% of the historical average.  The above-average rainfall may boost arabica coffee yields in Brazil, the world’s largest arabica-coffee producer.  A negative for arabica coffee Friday was weakness in the Brazilian real, which is fell to a new record low Friday of 4.2856 real/USD.  A weaker real encourages export selling Brazil’s coffee producers and is bearish for coffee prices.

Mar cocoa prices on Friday closed lower but still finished the week up by +1.61%.  Mar cocoa rallied to a 1-week high Thursday on smaller global supplies.  Jan cocoa exports from Cameroon, the world’s fifth-biggest cocoa exporter, fell sharply by -58% y/y to 7,210 MT from 17,285 MT a year ago, according to a report Thursday by the Ports Authority of Douala.  Supply concerns were already underpinning cocoa prices this week after the Ivory Coast government on Monday reported that Ivory Coast farmers sent 59,898 MT of cocoa to ports during Jan 20-26, down -8.6% y/y.  On a cumulative basis, however, Ivory Coast farmers have sent a total of 1.411 MMT of cocoa to ports during Oct 1-Jan 26, up +8.5% y/y.   In a negative factor for cocoa prices, the Ghana Cocoa Board on Monday reported that it purchased 569,781 MT of cocoa from farmers during Oct 1-Jan 16, up +8.1% y/y.  Also, the International Cocoa Association (ICCO) last Friday reported that global 2018/19 cocoa ending stocks rose +1.4% y/y to 1.538 MMT.  Also, increased rainfall in West Africa is bearish for cocoa prices as it may boost Ivory Coast and Ghana cocoa yields.  Satellite imagery on Monday from the U.S. Climate Prediction Center for Jan 19-25 showed above-average rainfall across most of the Ivory Coast, although Ghana still showed some dry conditions.

Mar cotton on Friday tumbled to a 6-week low and finished the week down by -2.74%.  Cotton prices sold off this week on concern the spread of the China coronavirus will derail the global economy and demand for cotton.  China’s economy is seeing significant damage from the quarantining of large swaths of China’s population, large-scale business shutdowns, and extensions of the Lunar New Year holiday.  Chinese cotton demand was already weak after China Dec cotton imports fell -29.8% y/y to 150 MT.  Mar cotton rallied to an 8-3/4 month high Jan 13 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.  Chinese cotton production has declined after China’s National Bureau of Statistics on Dec 16 reported that China 2019 cotton production fell -3.5% y/y to a 2-year low of 5.89 MMT.  Another bearish factor was the action by Cotlook on Friday to raise its 2019/20 global cotton surplus estimate to 510,000 MT from a Dec forecast of 389,000 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 Cotton Association of India forecasts 2019/20 cotton production in India, the world’s biggest cotton producer, may climb +13.6% y/y to 35.45 mln bales.  The USDA estimates that Chinese 2019/20 cotton ending stocks will fall to an 8-year low of 7.238 ln bales, but that U.S. 2019/20 cotton ending stocks will rise to a 12-year high of 5.40 mln bales.