Softs this week settled higher:Â SBH0 +0.24 (+1.85%), KCH0 +5.75 (+4.83%), CCH0 +39 (+1.52%), CTH0 +0.64 (+0.98%).Â
Mar sugar on Friday pushed up to a 9-1/4 month nearest-futures high and finished the week up +1.85%.  Concern about global sugar production fueled fund buying of sugar futures this week. The Indian Sugar Mills Association (ISMA) on Tuesday reported the India’s sugar production during Oct 1-Nov 30 fell sharply by -54% y/y to 1.89 MMT. The ISMA on Nov 5 projected India 2019/20 sugar production will fall -19% y/y to 26.85 MMT. Sugar prices also have support from strength in crude oil prices climbed to a new 2-1/2 month high Friday. Higher crude oil prices benefit 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. A rally in the Brazilian real to a 3-week high against the dollar Friday is another bullish factor for sugar as the real partially recovers from last Tuesday’s record low of 4.2684 reals/USD. A stronger real discourages export selling by Brazil’s sugar producers.
Mar arabica coffee rallied to a new 1-year high Friday closed higher and finished the week up by +4.83%. March arabica coffee poste d 1-year high Friday and nearest-futures (Z19) posted a 1-3/4 year high on the outlook for global coffee stocks to turn into a deficit. Coex Coffee International on Wednesday said that Brazil’s coffee crop will be closer to 54-55 million bags, below the USDA’s forecast of 58 million bags. Tuesday’s ICO data showed that global Oct coffee exports fell -13% y/y to 8.91 million bags, although total 2019 global coffee exports (Oct-Sep) rose +8.1% y/y to 129.4 million bags. The ICO forecasts a global 2019/20 coffee deficit of -502,000 bags compared with a +3.7 million bag global surplus in 2018/19. Monday’s data from Brazil’s Trade Ministry showed that Brazil’s Nov coffee exports fell -0.8% m/m and -15.4% y/y to 3.293 million bags. Strength in the Brazilian real also gave arabica coffee prices a boost as the real rose to a 3-week high against the dollar Friday, partially recovering from last Tuesday’s record low of 4.2684 reals/USD. A stronger real discourages export selling by Brazil’s coffee producers. Weather concerns in Brazil are another supportive factor for coffee prices after Monday’s data from Somar Meteorologia showed that rainfall in Minas Gerais, Brazil’s largest arabica coffee growing region, was only 57.9 mm over the past week, or 78% of the historical average, which may curb Brazil’s coffee yields. Also, arabica coffee inventories continue to decline, which is also providing support to coffee prices. ICE-monitored arabica coffee inventories fell to a 16-month low of 2.056 million bags on Tuesday.
Mar cocoa prices on Friday posted a 1-week high and finished the week up +1.52%. The outlook for smaller supplies has fueled fund buying of cocoa futures this week. INTL FCStone on Thursday said it sees “sustained” cocoa prices into Q1 2020 amid a global cocoa deficit of -50,000 MT. FCStone said West African cocoa farm investment has declined in recent years, leaving aging cocoa trees and eroding production potential. Cocoa supplies in storage have tightened as ICE-monitored cocoa inventories have trended lower over the past six months and posted a 2-3/4 year low of 2.921 million bags Thursday. Another positive factor for cocoa prices was the Nov 29 forecast from the International Cocoa Organization (ICO) that the global 2018/19 cocoa market will tighten to a deficit of -21,000 MT versus its previous estimate for a surplus of +18,000 MT. Cocoa prices fell to a 3-week low on Monday on robust supplies from the Ivory Coast, the world’s biggest cocoa producer. The Ivory Coast government on Monday reported that Ivory Coast farmers sent 701,939 MT of cocoa to ports during Oct 1-Dec 1, up +3.8% y/y.
Mar cotton rallied to a 2-1/2 week high Friday and finished the week up +0.98%. Cotton prices rallied Friday after China’s finance ministry said it has started to process applications from some domestic companies to exempt their purchases of U.S. agricultural goods, including cotton. Mar cotton had dropped to a 2-week low Tuesday on trade uncertainty after President Trump said he might wait until after the 2020 presidential election before he signs a trade deal with China. Cotton supplies are ample as the USDA projects U.S. 2019/20 cotton ending stocks at 6.1 mln bales, an 11-year high. Dec cotton slumped to a contract and 3-1/2 year nearest-futures (V19) low Aug 26 when President Trump on Aug 23 raised tariffs on Chinese imports. 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. Monday’s USDA Crop Progress report showed 83% of the U.S. cotton crop was harvested as of Dec 1, +2 pts above the 5-year average.