Softs

Softs this morning are mixed with Mar sugar +0.12 (+0.88%), Mar coffee -0.05 (-0.04%), Mar cocoa -14 (-0.69%), Mar cotton +0.56 (+0.73%). Softs on Thursday settled mixed: Mar sugar -0.42 (-3.00%), Mar coffee -0.45 (-0.36%), Mar cocoa +21 (+1.04%), Mar cotton +0.66 (+0.87%). Mar sugar on Thursday closed lower as the fall in crude oil prices to a 1-month low undercuts ethanol prices and may prompt Brazil's ethanol producers to cut back on production that boosts sugar supplies. Mar sugar posted a 3-week high Tuesday after researcher Sucden forecast global 2018/19 sugar production may fall -3.3% to 141 MMT. Mar sugar posted a 4-1/4 month nearest-futures low Jan 19 on signs of robust global supplies. India raised its 2017/18 sugar production estimate to 36.1 MMT from 25.1 MMT and said it may export a much a 1 MMT of sugar to reduces surpluses, the first time it may export sugar in 2-years. Researcher Green Pool Commodity Specialists recently raised their 2017/18 global sugar surplus estimate to 10.4 MMT from an Oct estimate of 9.8 MMT. Data from Unica shows sugar production in the 2017/18 crop year through mid-Jan in Brazil's Center-South region was up +1.65% y/y at 35.827 MMT, and that the percent of sugar use for ethanol production fell to 53.08% from 53.40% last year. ISO projects a global 2017/18 sugar surplus of +5.03 MMT following the global 2016/17 deficit of -6.465 MMT. The USDA's Foreign Agricultural Service (FAS) on Nov 17 raised its 2017/18 global sugar surplus estimate to 10.73 MMT from a May forecast of 8.07 MMT and raised its global 2017/18 sugar production estimate to a record 184.95 MMT from a May view of 179.64 MMT.

Mar coffee prices on Thursday fell back from a 1-week high and closed lower after the Brazilian real fell to a 1-month low against the dollar, which gives Brazil's coffee producers incentive to boost more-profitable exports with the weak real. Mar coffee had posted a 1-week high on fund short-covering after Columbia, the world's second-biggest arabica bean producer, reported its Jan coffee output fell -11% y/y to 1.13 mln bags. Mar coffee posted a 1-1/2 month low Tuesday on signs of ample global supplies. The ICO reported Friday that global Dec coffee exports rose +0.8% y/y to 10.62 mln bags, and Brazil reported its Jan coffee exports rose +6.4% y/y to 2.618 mln bags. Also, ICE-monitored coffee inventories last month rose to a 2-1/4 year high of 2.017 mln bags. The ICO projects global 2017/18 coffee production will climb +0.8% y/y to a record 158.93 mln bags. Also, Conab, Brazil's forecasting agency, forecast Brazil 2018 coffee output may jump +30% to as much as 58.5 mln bags from 44.97 mln bags in 2017 on timely rains. Abundant global supplies had fueled fund selling and pushed Mar coffee prices down to a contract low on Dec 12. ICO data shows global 2016/17 arabica coffee exports rose by +5.4% y/y to 76.23 mln bags, although 2017/18 global coffee exports from Oct-Dec are at 28.36 mln bags, down -6.7% y/y. The ICO projects a global 2016/17 coffee ending stocks surplus of 2.38 mln bags, the first surplus in 3 years. The Green Coffee Association reported that U.S. Dec coffee inventories rose +6.0% y/y to 6.632 mln bags. The USDA on Dec 15 projected that global 2017/18 coffee ending stocks will fall -8.6% to a 5-year low of 29.3 mln bags.

Mar cocoa prices on Thursday closed higher after the Indonesian Cocoa Association said it may need to import 250,000 MT of cocoa this year due to declining domestic production. Current supplies are adequate after data showed Ivory Coast farmers delivered 1.246 MMT of cocoa beans to Ivory Coast ports from Oct 1-Feb 4, up +0.4% y/y. Cocoa prices had risen to a 2-month high Monday on weather concerns in the Ivory Coast after Speedwell Weather reported that over the past month the Ivory Coast has received less than 75% of normal rainfall. Another supportive factor is signs of stronger global demand. Recent data from Barry Callebaut showed global chocolate sales rose +3.1% in the three months through Oct and the European Cocoa Association reported European Q4 cocoa processing rose +4.4% y/y to 353,286 MT, higher than expectations of +3.4% y/y and the most for a Q4 since the data began in 1999. However, Q4 Asia cocoa grindings rose +4.2% to 196,476 MT, below expectations of +8% y/y, and Q4 North American cocoa grindings unexpectedly fell -1.3% to 116,080 MT, weaker than expectations for a +2.5% increase. Mar cocoa on Dec 22 posted a contract low as signs of abundant supplies spurred fund selling of cocoa futures. The Ivory Coast on Dec 21 boosted its 2017/18 main cocoa crop forecast to 1.40 MMT to 1.45 MMT from a prior forecast of 1.35 MMT. Also, the ICCO recently hiked its 2016/17 global cocoa production estimate to a record 4.73 MMT from a prior estimate of 4.70 MMT, which will result in a 6-year-high global 2016/17 surplus of +335,000 MT. Ghana said its 2016/17 cocoa production rose +25% y/y to 969,438 MT, a 6-year high. The Ivory Coast, the world's biggest cocoa producer, reported cocoa purchases, a sign of production, rose to 2.015 MMT from Oct-Sep 24, up +29% y/y and a record high.

Mar cotton on Thursday closed higher on strength in foreign demand for U.S. cotton after the USDA reported 520.9 running bales of upland cotton were sold the week of Feb 1, up +56% w/w. Prices fell back from their best levels after the USDA in Thursday's WASDE report unexpectedly raised its U.S. 2017/18 cotton ending stocks estimate to a 9-year high of 6.0 mln bales, more than expectations of a cut to 5.6 mln bales. The USDA also raised its global 2017/18 cotton ending stocks estimate to 88.55 MMT, higher than expectations of a cut to 87.4 MMT, and raised their global 2017/18 cotton production estimate to a 5-year high of 121.37 MMT. Cotton prices remain on the defensive and posted a 1-1/2 month low Wednesday on signs of increased supplies after ICE-monitored cotton inventories rose to 6-3/4 month high of 76,757 bales. Another negative is concern the rally in cotton prices to an 8-3/4 month high last month will spur increased global production after Rabobank predicted U.S. farmers may boost their cotton acreage for 2018/19 by 2.0 mln acres to 14.6 mln acres, the most in 7-years. Cotton prices posted an 8-3/4 month nearest-futures high Jan 12 on expectations of increased foreign demand for U.S. cotton. Chinese cotton demand has been robust as China's 2017 cotton imports rose +28.9% y/y to 1.15 MMT. The Pakistan Textile Mills Association on Dec 6 said Pakistan may need to import 2.5 mln bales of cotton in 2018. Recent foods in Pakistan, the world's fourth-largest cotton producer, may reduce its cotton crop and prompt it to import as much as 1 mln bales this year, according to researcher Rose Commodity Group. The USDA projects global 2017/18 cotton use will climb to 120.5 mln bales, a 10-year high. On the negative side, the Cotton Advisory Board recently predicted 2017/18 cotton production in India, the world's biggest cotton producer, will climb +9.3% y/y to a 3-year high of 37.7 mln bales.