Softs this week settled mixed:Â SBH0 +0.32 (+2.43%), KCH0 +6.10 (+4.89%), CCH0 -35 (-1.34%), CTH0 +0.80 (+1.21%).Â
Mar sugar on Friday rallied to a 13-month nearest-futures high and finished the week up +2.43%. Sugar prices have moved steadily higher over the past seven weeks to Friday’s 13-month high as the outlook for smaller global supplies has spurred fund buying of sugar futures. Tuesday’s data from Unica showed that Brazil’s Center-South sugar production in the second-half of Nov tumbled -36.7% y/y to 337,000 MT as ethanol output the second-half of Nov rose +2.9% y/y to 770 million liters. However, total Brazil Center-South 2019/20 sugar output through Nov was mildly higher by +2.22% y/y at 26.409 MMT. Tuesday’s WASDE report was bullish for sugar as the USDA cut its total U.S. 2019/20 sugar production estimate by -3.8% to 8.28 NMT from last month’s estimate of 8.61 MMT. Sugar prices also have support from a rally in Jan WTI crude oil to a 2-3/4 month high on 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.
Mar arabica coffee climbed to a 13-month high Friday and nearest0futures (Z19) posted a 2-1/4 year high and finished the week up by +4.89%. Coffee prices rallied sharply this week as the outlook for tighter global coffee inventories has fueled fund buying of coffee futures. Safras & Mercado on Thursday cut its Brazil 2019 coffee production estimate by -3.1% to 57.05 mln bags from April’s estimate of 58.9 mln bags. Safras also projects Brazil’s 2019/20 coffee ending stocks will plunge -26.8% y/y to 2.32 mln bags and that Brazil 2019/20 coffee exports will fall -18.4% y/y to 34.4 mln bags. The International Coffee Organization (ICO) is forecasting a global 2019/20 coffee deficit of -502,000 bags compared with a +3.7 million bag global surplus in 2018/19. Strength in the Brazilian real also gave arabica coffee prices a lift as the Brazilian real climbed to a 5-week high Friday. A stronger real discourages export selling from 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 41 mm over the past week, or 59% of the historical average, which may curb Brazil’s coffee yields. Arabica coffee inventories continue to decline, which is also providing support to coffee prices. ICE-monitored arabica coffee inventories fell to a 1-1/2 year low of 2.032 million bags Friday.
Mar cocoa prices on Friday closed higher but still finished the week down -1.34%. Mar cocoa posted a 1-month low Thursday as cocoa prices have been under pressure most of this week as data show abundant cocoa supplies from the Ivory Coast, the world’s largest cocoa producer. Ivory Coast government data on Monday showed that Ivory Coast farmers sent 795,290 MT of cocoa to ports during Oct 1-Dec 8, up +5.5% y/y. 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 2.787 million bags Friday. Stronger cocoa demand is positive for prices after Wednesday’s data from exporters’ group Gepex, six of the world’s biggest cocoa grinders, showed Gepex Nov cocoa processing rose +11% y/y to 49,373 MT.Â
Mar cotton jumped to a 6-1/2 month high Friday and finished the week up +1.21%. Cotton prices rallied Friday after China Vice Commerce Minister Wang Shouwen confirmed that China and the U.S. have agreed on the text of a phase one trade deal, which will see removal of tariffs on Chinese goods in stages. Cotton prices fell back from their best levels, though, as Chinese officials failed to specify volume targets for purchases of U.S. agricultural goods, including cotton. Tuesday’s WASDE report was supportive for cotton as the USDA cut its U.S. 2019/20 cotton production estimate to 20.21 mln bales, lower than expectations of 20.59 mln bales. The USDA also cut its U.S. 2019/20 cotton ending stocks estimate to 5.5 mln bales, below expectations of 6.01 mln bales, but still a 12-year high. The USDA also cut its global 2019/20 cotton ending stocks estimate to 80.32 mln bales, below expectations of 80.62 mln bales. 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.