Softs last week settled mixed:Â SBK0 -1.12 (-7.92%), KCK0 -3.95 (-3.55%), CCK0 -111 (-4.15%), CTK0 +1.30 (+2.11%).Â
May sugar on Friday fell to a 3-month low and finished the week down -7.92%. Weakness in crude prices and a plunge in the Brazilian real on Friday weighed on sugar prices. Crude oil plunged more than -10% Friday to a 2-3/4 year low, which is harmful for ethanol prices and may prompt Brazil’s sugar mills to divert more cane crushing toward sugar production, thus boosting sugar supplies. Also, the continued sell-off in the Brazilian real on Friday spurred selling of sugar futures. The real fell -0.37% against the dollar Friday and posted a record low of 4.6708 reals/USD. A weaker real encourages export selling by Brazil’s sugar producers. Global demand concerns are also weighing on sugar prices. Monday’s news that eight sugar traders delivered 956,100 MT of sugar against expiring March NY sugar futures contracts, the fourth-largest March delivery in data going back to 1989 and a sign of weak global demand. Another bearish factor for sugar was an increase in global supply after Brazil’s Trade Ministry on Monday reported that Brazil’s Feb sugar exports rose +12.4% y/y to 1.309 MMT. Sugar has support from reduced sugar production in India. The India Sugar Trade Association (ISMA) on Tuesday reported that sugar production in India, the world’s second-largest sugar producer, dropped sharply by -22% y/y to 19.489 MMT during Oct-Feb. Â
May arabica coffee on Friday fell to a 1-week low and finished the week down -3.55%. Coffee prices retreated Friday on concern that the spreading coronavirus will curb demand for commodities, including coffee. Arabica coffee also fell back on weakness in the Brazilian real, which fell -0.37% against the dollar Friday and posted a new record low of 4.6708 reals/USD. A weaker real encourages export selling of arabica coffee by Brazil’s coffee producers. Coffee prices earlier this week rallied sharply with arabica coffee on Tuesday at a 1-3/4 month high on weather concerns in Brazil. Somar Meteorologia on Tuesday said parts of Brazil’s coffee-growing regions might get as much as 300 mm (7.9 inches) of rain in four days, which could flood coffee farms and damage crops. Somar Meteorologia reported Monday that rainfall in Minas Gerais, Brazil’s largest arabica coffee growing region, measured 96.8 mm in the past week or 156% of the historical average. A bullish factor for coffee was Wednesday’s data that showed Columbia Feb coffee production fell -9% y/y to 1.001 mln bags. Columbia is the world’s second-largest arabica coffee producer. Smaller global coffee supplies are supportive for coffee prices after the International Coffee Organization (ICO) on Monday reported that global 2019/20 coffee exports during Oct-Jan fell -5.8% y/y to 39.527 mln bags. Also, Vietnam’s General Statistics Office on Monday said Vietnam Jan-Feb coffee exports fell -6.6% y/y to 295,000 MT. Vietnam is the world’s largest producer of robusta coffee beans. In a negative factor for coffee prices, ICO on Tuesday reduced its global 2019/20 coffee deficit forecast to -476,000 bags from a Jan projection of -626,000 bags. In a bearish factor, Rabobank said on Monday that it expects Brazil’s 2020/21 coffee production to climb +16% y/y to a record 67.5 mln bags.
May cocoa prices on Friday dropped to a 1-3/4 month low and finished the week down -4.15%. Cocoa prices fell back on concern that the spread of the China coronavirus will derail the global economy and demand for commodities, including cocoa. Another bearish factor for cocoa was Friday’s projection from the International Cocoa Organization (ICO) for the global 2019/20 cocoa deficit to narrow to -85,000 MT from -107,000 MT in 2018/19. Also, ample supply from the Ivory Coast, the world’s biggest producer, is bearish for cocoa prices after the Ivory Coast government on Monday reported that Ivory Coast farmers sent 34,117 MT of cocoa to ports during Feb 24-Mar 1, up +28% from the same time last year. On a cumulative basis, Ivory Coast farmers sent 1.64 MMT of cocoa to ports during Oct 1-Mar 1, up +8.6% y/y. In a bearish factor, cocoa inventories in storage have recovered sharply. ICE-monitored cocoa inventories recovered to a 5-1/4 month high of 3.754 mln bags Thursday from December’s 3-year low of 2.688 million bags. A bullish factor for cocoa was Friday’s data from Gepex, an exporter’s coalition that includes six of the world’s biggest cocoa grinders, that showed Feb cocoa processing rose +5.7% y/y to 44,297 MT. Cocoa also has support from weather concerns in Ghana, the world’s second-largest cocoa producer. Monday’s data from the U.S. Climate Prediction Center for Feb 24-Mar 1 showed that the ongoing drought in Ghana is increasing the prospects for a poor cocoa crop.
May cotton on Friday closed lower but still finished the week up by +2.11%. May cotton rallied to a 1-week high Tuesday after Cotlook projected the global 2020/21 cotton surplus will narrow to +207,000 MT from an +832,000 MT surplus in 2019/20. Cotton prices also found support on stronger foreign demand for U.S cotton after the USDA reported Thursday that U.S. export sales of upland cotton were 396,000 bales in the week ended Feb 27, up +84% w/w and the best export sales week in a year. May cotton slumped to a 5-month low Feb 28 on concern global cotton demand may be ravaged if the China coronavirus expands into a pandemic. Chinese demand concerns are negative for cotton after the USDA in the Feb 11 WASDE report cut its Chinese 2020 cotton demand forecast to 37.5 mln bales from 38.5 mln bales forecast in Jan. 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. The USDA on Feb 11 unexpectedly kept its U.S. 2019/20 cotton ending stocks estimate unchanged at a 12-year high of 5.40 mln bales and hiked its global 2019/20 cotton ending stocks estimate to a 4-year high of 82.12 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 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. On Monday the USDA’s FAS projected India 2019/20 cotton acreage would climb +5.6% y/y % to a record 13.3 million hectares.