Softs this week settled mixed:Â SBN0 +1.11 (+10.17%), KCN0 +2.60 (+2.70%), CCN0 -56 (-2.28%), CTN0 +4.20 (+7.29%).Â
July sugar on Friday rallied to a 2-1/2 month high and finished the week up sharply by +10.17%. A rally in crude oil on Friday to a 3-month high boosted sugar prices, along with strength in the Brazilian real, which climbed to a 2-1/2 month high against the dollar. The Brazilian real on Friday jumped +2.94% against the dollar to a 2-1/2 month high. In a bearish factor, the Indian Sugar Mills Association (ISMA) on Tuesday raised its India 2019/20 sugar production estimate to 27 MMT from a previous forecast of 26.5 MMT. ISMA also reported that India’s 2019/20 Oct-May sugar output fell -18.1 y/y to 26.82 MMT.
July arabica coffee on Friday closed higher and finished the week up +2.70%. Jul coffee initially slumped to a 7-1/4 month low Monday on signs of mounting supplies. The USDA’s Foreign Agricultural Service (FAS) May 28 projected that Brazil’s 2020/21 coffee production will 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. FAS also projected that Brazil’s 2020/21 coffee exports will climb +12% y/y to 41.024 mln bags. On Wednesday, Colombia reported that its May coffee production rose +6% y/y to 1.186 mln bags. Colombia is the world’s second-largest producer of arabica beans. Dry weather in Brazil is bearish for coffee as it speeds the country’s coffee harvest. Somar Meteorologia reported Tuesday that rainfall in Minas Gerais was only 10 mm in the past week or 54% of the historical average. Coffee prices erased all of their losses, however, and finished moderately higher on the week on dwindling U.S. coffee supply after ICE-monitored arabica coffee inventories on Thursday fell to a 2-3/4 year low of 1.745 mln bags.
July cocoa prices on Friday closed slightly higher but still finished the week down -2.28%. Jul cocoa posted a 2-1/2 month high Monday after the Ghana Cocoa Board reported that Ghana cocoa purchases during Oct 1-May 14 fell -3.0% y/y to 721,632 MT. 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. Ghana is the world’s second-largest cocoa producer. Cocoa prices then gave up their gains and trended lower the rest of the week. Adequate rainfall in West Africa should boost cocoa yields and is negative for prices. Satellite imagery from the U.S. Climate Prediction Center on Tuesday showed normal to above-average rainfall across most of the Ivory Coast and Ghana during May 24-30. The Ivory Coast government on Tuesday reported that Ivory Coast farmers sent 29,918 MT of cocoa to ports during May 25-31, unchanged from a year earlier, shaking off the potential for pandemic-related disruptions. Longer-term deliveries are bearish with Ivory Coast cocoa farmers delivering 2.01 MMT of cocoa during Oct 1-May 31, up +0.5% y/y.
July cotton on Friday surged to a 2-1/2 month high and finished the week up sharply by +7.29%. Optimism that the easing of coronavirus lockdowns will lead to a pick-up in global economic activity and boost demand for U.S. cotton is supportive for cotton prices. Also, weather concerns are supportive for cotton after Maxar said Monday that about 50% of the cotton-growing areas of West Texas, the top U.S. growing region, will remain under stress over the next 10 days after getting only 25% of average rains in the past month. Cotton prices had been under recent pressure as ramped up U.S./China tensions sparked concern over Chinese demand for U.S, cotton. Also, the International Cotton Advisory Committee said that due to the coronavirus pandemic, global cotton consumption may fall -11% y/y to 23 MMT, which could push global 2019/20 cotton ending stocks up to a 5-year high of 21.75 MMT. Thursday’s weekly USDA export sales data was bearish for cotton after the USDA reported a net reduction of U.S. cotton sales the week of May 28 of -10,100 running bales after cancelation of U.S. cotton purchases from Turkey, Vietnam and Malaysia.