Softs this week settled mixed: SBK0 +0.19 (+1.74%), KCK0 -3.85 (-3.22%), CCK0 +27 (+1.21%), CTK0 -2.35 (-4.38%). May sugar on Friday closed lower, but still finished the week up +1.74%.Â
Sugar prices rallied to a 2-week high Wednesday on supply disruptions in India. Several ports and terminals in India have declared force majeure due to shutdowns from the coronavirus pandemic. The Indian Sugar Mills Association (ISMA) on Wednesday said that India’s cane crushing may be affected during the 3-week long lockdown imposed by the Indian government to slow the spread of the coronavirus.  The CEO of the Indian Sugar Exim Corp said on Friday that India would miss its sugar export target this year of 5 MMT since the coronavirus pandemic is causing a shortage of labor at ports and sugar mills. On the negative side for sugar was Friday’s forecast from Green Pool Commodity Specialists forecasted that the global 2020/21 sugar market would be in surplus by +0.3 MMT, showing an easier supply situation than its previous estimate for a deficit of -3.04 MMT. Another negative for sugar was Wednesday’s forecast from Rabobank for a global 2020/21 sugar surplus of +0.6 MMT compared with a -6.7 MMT sugar deficit for 2019/20. Rabobank projects that India’s 2020/21 sugar production will climb +15.9% y/y to 33.5 MMT and that EU 2020/21 sugar output will climb +4.0% y/y to 18.3 MMT. Sugar prices were under pressure on Wednesday’s report from Unica that showed Brazil’s 2019/20 Center-South sugar production Oct-through mid-Mar rose +0.61% y/y to 26.532 MMT. The percentage of sugar cane crushed for sugar fell to 34.38% from 35.34% last year, and the percentage of cane crushed for ethanol production rose to 65.62% from 64.66% last year.Â
May arabica coffee on Friday fell to a 1-week low and finished the week down -3.22%. Coffee prices fell back Friday on an expected surge in coffee supplies. Thursday’s data from the ICE exchange showed that there were 40,157 bags of coffee awaiting an assessment from the exchange to be included in warehouse inventories. That’s up from 2,200 bags at the start of last week. The ICE Exchange last week had said that due to the coronavirus pandemic, coffee grading was disrupted at ICE-approved warehouses. The disruption caused ICE to say that it could no longer ensure that the sampling and grading process will be completed in time for the expiration of the May coffee futures contracts. U.S. coffee supplies in storage are dwindling as ICE-monitored coffee inventories fell to a 1-3/4 year low Thursday of 2.017 mln bags. On Wednesday, arabica coffee rose to a 2-1/2 month high on concern about supply disruptions in South America. Brazil’s Sao Paulo state began a 15-day quarantine Tuesday, Columbia put its entire population on a 3-week lockdown, and El Salvador ordered the closure of all non-essential businesses through April 3. Another supportive factor for coffee prices is wetter weather in Brazil that may prevent rain-soaked coffee farms from drying out after recent heavy rains. Somar Meteorologia on Monday reported that rain in Minas Gerais, Brazil’s largest arabica coffee-growing region, was 65.5 mm in the past week, or 165% of the historical average. Â
May cocoa prices on Friday closed higher and finished the week up +1.21%. May cocoa rallied to a 1-1/2 week high Wednesday on concern Ivory Coast cocoa supplies might be disrupted after Ivory Coast’s President on Tuesday imposed a state of emergency and limited the movement of people within the country to contain the spread of the coronavirus. Monday’s data from the Ivory Coast government was bullish for cocoa prices as it showed Ivory Coast farmers sent only 25,560 MT of cocoa to ports from Mar 16-22, down -26.7% from the same time last year. Although on a cumulative basis, farmers sent 1.721 MMT of cocoa to ports during Oct 1-Mar 22, up +6.6% y/y. Cocoa prices also received a boost Monday from the news of inadequate rainfall in West Africa. Monday’s data from the U.S. Climate Prediction Center showed below-average rainfall during Mar 15-21 across most of West Africa. Adequate cocoa supply from Ghana, the world’s second-largest cocoa producer, is a negative factor for cocoa prices after the Ghana Cocoa Board reported Monday that it purchased 680,139 MT of cocoa from farmers during Oct 1-Feb 273, up +0.3% y/y. In a bearish factor, cocoa inventories in storage have recovered sharply. ICE-monitored cocoa inventories recovered to a 6-1/2 month high of 3.965 mln bags on Wednesday from December’s 3-year low of 2.688 million bags.
May cotton on Friday closed lower and finished the week down -4.38%. May cotton is attempting to hold above the 10-3/4 year nearest-futures low posted on March 19. Cotton prices were under pressure Friday after Cotlook raised its 2019/20 global cotton surplus estimate to 2.82 MMT from a previous forecast of 832,000 MT as the coronavirus pandemic decimates cotton demand. Also, Plexus Cotton on Monday said that global cotton demand might see a drop of 12-14 mln bales this year due to “demand destruction” from the coronavirus pandemic with clothing retailers closed and unable to receive new merchandise. China’s economy is seeing significant damage from the quarantining of large swaths of China’s population and large-scale business shutdowns, as many China cotton mills remain closed due to a lack of workers, which will further crimp China’s demand for cotton. Another bearish factor was the Feb 18 forecast from the Cotton Association of India that 2019/20 cotton production in India, the world’s biggest cotton producer, may climb +13.6% y/y to 35.45 mln bales. Chinese cotton production has declined as China 2019 cotton production fell -3.5% y/y to a 2-year low of 5.89 MMT. The USDA estimates that Chinese 2019/20 cotton ending stocks will fall to an 8-year low of 7.238 mln bales. Another supportive factor was Tuesday’s projection from researcher AgResource that U.S. 2020/21 cotton acreage will fall -23.6% y/y to a 4-year low of 10.5 million acres, below USDA forecasts of 12.5 million acres.