Softs this week settled mixed: SBN0 -0.02 (-0.18%), KCN0 -7.30 (-7.05%), CCN0 +60 (+2.51%), CTN0 -0.02 (-0.03%). July sugar on Friday closed higher but still finished the week down slightly by -0.18%. On Thursday,Â
NY sugar fell to a 1-1/2 week low as the outlook for robust sugar supplies undercut sugar prices. The USDA’s Foreign Agricultural Service (FAS) on Wednesday forecast that India’s 2020/21 sugar production will climb +17% y/y to 33.705 MMT. FAS also projected that India’s 2020/21 sugar ending stocks would climb +8.8% y/y to 17.419 MMT. India is the world’s second-largest sugar producer. India’s sugar production is expected to recover in 2020/21 after a decline in 2019/20. The Indian Sugar Mills Association (ISMA) reported last Monday that India’s 2019/20 Oct-May 15 sugar output fell -19% y/y to 26.47 MMT. Weak ethanol demand in Brazil is bearish for sugar prices as the coronavirus pandemic ravages the country’s economy. Unica reported Tuesday that Brazil’s total ethanol sales in the Center-South region fell -22% y/y to 1.055 bln liters the first half of May.  Brazil is the new hotspot for the coronavirus and trails only Russia and the U.S. in confirmed Covid-19 infections. Reduced ethanol demand will encourage Brazil’s mills to produce less ethanol and more sugar. Sugar prices are also under pressure from Unica’s report on Tuesday that Brazil’s Center-South sugarcane crush in the first half of May rose +8.76% y/y to 42.46 MMT, above expectations of 41.7 MMT. Sugar production the first half of May surged +55.8 y/y to 2.5 MT, with the percentage of cane used for sugar climbing to 47.23% in 2020/21 from 36.02% in 2019/20.Â
July arabica coffee on Friday sold-off to a 7-1/4 month low and finished the week down sharply by -7.05%. Coffee prices trended lower over the past week on mounting supplies and weak demand. The USDA’s Foreign Agricultural Service (FAS) on Thursday projected that Brazil’s 2020/21 coffee production would climb +14.5% y/y to a record 67.9 mln bags due to “good weather conditions in the majority of growing regions” during the higher-yielding half of the biennial crop cycle. The FAS also projected that Brazil’s 2020/21 coffee exports would climb +12% y/y to 41.024 mln bags. Dry weather in Brazil is bearish for coffee as it speeds the country’s coffee harvest. Somar Meteorologia reported on Monday that rainfall in Minas Gerais was only 4.4 mm in the past week or 26% of the historical average. Persistent weakness in the Brazilian real is another major bearish factor for coffee prices, The real sank to a record low of 5.97 reals/USD on May 14, although the real did recover to a 1-1/4 month high against the dollar on Wednesday. A supportive factor for coffee is dwindling U.S. coffee supply after ICE-monitored coffee inventories on Wednesday fell to a 2-1/2 year low of 1.778 mln bags.
July cocoa prices on Friday rallied to a 2-week high and finished the week up +2.51%. A slump in the dollar index Friday to 2-1/2 month low sparked buying in most commodities, including cocoa futures. Smaller cocoa supplies from West Africa are also underpinning prices.  The Ivory Coast government on Monday reported that Ivory Coast farmers sent 30,731 MT of cocoa to ports during May 18-24, down -12.4% from a year earlier. However, longer-term deliveries are bearish with Ivory Coast cocoa farmers delivering 1.982 MMT of cocoa during Oct 1-May 24, up +0.9% y/y. The Ghana Cocoa Board on Tuesday reported that Ghana cocoa purchases during Oct 1- May 7 fell -1.6% y/y to 714,523 MT. Also, the Ghana Cocoa Board on May 4 cut its Ghana 2019/20 cocoa crop estimate to a 4-year low of 780,000 MT, down slightly from an October estimate of 800,000 MT. Cocoa prices have support from Fitch’s recent forecast for the global cocoa market to tighten in 2019/20 because of slowing cocoa output growth in Ivory Coast and falling output in Indonesia and Ghana. Fitch also expects global demand growth to stay positive, despite the coronavirus pandemic, due to excellent demand growth in Asia cocoa and stronger growth in Europe.
July cotton on Friday tumbled to a 2-1/2 week low but recovered ost of its losses and finished the week down by only -0.03%. Weak global demand has pushed cotton supplies higher as Cotlook on Friday raised its 2020/21 global cotton surplus estimate to 1.17 MMT from a prior estimate of 1.07 MMT. Cotton prices are also under pressure as ramped up U.S./China tensions sparked concern over Chinese demand for U.S, cotton. Cotton prices had climbed to a 2-1/2 month high May 20 on concern about global cotton production. The USDA’s FAS on May 14 projected that India 2020/21 cotton production would fall -2.7%y/y to 28.5 mln bales. Also, the USDA in the May 12 WASDE report estimated U.S. 2020/21 cotton production of 19.50 mln bales, below consensus of 20.36 mln bales. The USDA also projects U.S. 2020/21 cotton exports will increase to 16.0 mln bales, above consensus of 15.64 mln bales. In addition, the USDA projects global 2020/21 cotton consumption will increase to 116.46 mln bales, higher than consensus of 112.44 mln bales. On the negative side, the USDA projects global 2020/21 cotton ending stocks will climb to a 5-year high of 99.43 mln bales. Nearest-futures May cotton slumped to an 11-year nearest-futures low Apr 1 after the International Advisory Cotton Committee said with millions of people in Asia in self-isolation, the cotton and textile business is at a virtual standstill. On the positive side, the USDA estimates that Chinese 2019/20 cotton ending stocks will fall to an 8-year low of 7.238 mln bales. Tuesday’s USDA Weekly Crop Progress showed 53% of the U.S. cotton crop planted as of May 24, right on the 5-year average.