Softs Futures Prices
- Coffee Prices Near A 6 Week High
- Arabica Coffee (KC) Testing Weekly Chart Descending Wedge Resistance
Arabica Coffee (KC) rebounded almost 2% yesterday, bouncing off prior downchannel resistance (on the daily chart). Significantly, KC's current strong...
- Vertical Rever-sales Everywhere
Corn is a Disaster? But OLS. It's in the Spreads Farners, take Prevent, take a vac, be a victim, worst spring ever.?
Futures Market News and Commentary
Cotton futures saw gains of 72 to 91 points in the front months on Friday. The US dollar was down on the day, with crude oil back up 72 cents/barrel. July cotton was up 3.64% this week. The market will be back open for the Monday night session, in observance of the Memorial Day holiday. The CFTC Commitments report released on Friday indicated the large specs in cotton futures and options increasing their net short position by 12,258 contracts. That put them net short a record reported 37,086 contracts in the week ending May 21. USDA data shows cotton export shipments at 70% of USDA’s projected total, with the average pace at 78%. Including the unshipped sales, total commitments are 107% of that projection, with the average pace at 101%. The Cotlook A index for May 23 was down 55 points from the previous day to 77.75 cents/lb. The weekly Average World Price (AWP) is now 59.37 cents/lb, down 14 points from last week. Jul 19 Cotton closed at 68.390, up 91 points, Oct 19 Cotton closed at 67.990, up 76 points Dec 19 Cotton closed at 67.550, up 72 points --provided by Brugler Marketing & Management
July NY world sugar #11 (SBN19) on Friday closed up by +0.09 (+0.78%) and Aug ICE London white sugar #5 (SWQ19) closed up by +2.30 (+0.71%). Strength in crude oil and the Brazilian real on Friday fueled short-covering in sugar futures. Stronger crude prices are positive for ethanol prices and may prompt Brazil's sugar mills to divert more cane-crushing toward ethanol production rather than sugar production, this reducing sugar supplies. A stronger real discourages export selling by Brazil's sugar producers. Another positive for sugar prices was Thursday's data from Unica that Brazil Center-South 2019/20 sugar production in the first half of May fell -16.34% y/y to 1.595 MMT with the percentage of sugar cane used for sugar falling to 36.22% from 36.48% last year and the percentage of cane used for ethanol production climbing to 63.78% from 63.52% last year. July NY sugar tumbled to a 7-1/2 month low Tuesday and Aug London sugar dropped to a 9-month low on the outlook for abundant global supply. The India Sugar Mills Association forecast India's sugar stockpiles may reach a record high of 14.7 MMT by Sep 30, and Meir Commodities India Pvt projects India will boost its 2019/20 sugar exports to 6 MMT from 3 MMT exported this year in order to curb its excessive sugar reserves. Robust global sugar output continues to weigh on sugar prices as Conab projects that Brazil 2019/20 sugar production will climb by +17.4% y/y to 34.1 MMT and that Brazil's sugar mills will increase their percentage of cane crushing to produce sugar to 39.1% from 34.9% in 2018/19. Also, the USDA on Thursday estimated global 2019/20 sugar production will climb +1% y/y to 180.7 MMT and that global sugar consumption will climb by +1.4% y/y o 176.4 MMT. That will reduce global 2019/20 sugar ending stocks by -6.0% y/y to 47.8 MMT. A potentially supportive factor for Aug London white sugar is data that shows funds hold an extremely short sugar position. Friday's Commitment of Traders (COT) data showed funds boosted their net-short London white sugar positions by 822 contracts in the week ended May 21 to 21,335 constracts, the most since Oct 2011. Big Picture Sugar Market Factors: Bullish factors for sugar include (1) lower global production after Conab, Brazil's national crop agency, reported Brazil 2018/19 sugar output in the marketing year ended March 31 fell -17.2% y/y to an 11-year low of 31.4 MMT, and (2) increased demand from Indonesia, the world's largest sugar importer, after Indonesia's Sugar Refiners Association said refiners may import 3.2 MMT of raw sugar in 2019, up +5.3% y/y. Bearish factors include (1) Conab's forecast for Brazil 2019/20 sugar production to climb by +17.4% y/y to 34.1 MMT and that Brazil's sugar mills will increase their percentage of cane crushing to produce sugar to 39.1% from 34.9% in 2018/19, (2) the USDA's projection for global 2019/20 sugar production to climb +1% y/y to 180.7 MMT, (3) ISO's forecast that global 2018/19 sugar production rose +0.6% y/y to a record 185.2 MMT and that there was a 2018/19 sugar surplus of 2.2 MMT (vs 2017/18's 7.3 MMT), and (3) USDA's FAS estimate that 2018/19 sugar production in India, the world's second-largest sugar producer, rose +5.3% y/y to a record 35.9 MMT, and (4) the slump in the Brazilian real to a 7-3/4 month low against the dollar, which encourages export selling by Brazil's sugar producers.
July ICE NY cocoa (CCN19) on Friday closed up by +41 (+1.69%) and July ICE London cocoa #7 (CAN19) closed up by +16 (+0.90%). Cocoa prices on Friday extended this week's rally with July NY cocoa at a 10-1/2 month nearest-futures high and July London cocoa at a 3-week high. Cocoa crop risks in West Africa continue to underpin cocoa prices on concern that dry conditions in the Ivory Coast and an outbreak of the swollen shoot virus in Ghana may curb global cocoa output. Monday's data from the U.S. Climate Prediction Center showed below-average rainfall in the Ivory Coast during May 13-19, and Ghana's Cocoa Board said Tuesday it may need to cut its Ghana 2018/19 cocoa crop estimate to 800,000 MT from a prior view of 850,000 MT due to an outbreak of swollen shoot virus, which causes abnormally-shaped cocoa pods that lead to lower yields. On the negative side is abundant current cocoa supplies after cocoa inventories in ICE-monitored warehouses rose to a 9-3/4 month high Thursday of 4.657 million bags. Another bearish factor is strong cocoa output thus far as Monday's Ivory Coast government data showed Ivory Coast cocoa farmers sent 1.93 MMT of cocoa to ports during Oct 1-May 19, up +18.4% from the same time last year. Also, Friday's data from the Ghana Cocoa Board showed that cocoa production in Ghana, the world's second largest cocoa producer, was strong thus far as cocoa purchases from Ghana farmers during the first 32 weeks of the harvest (Oct 5 through May 16) rose +3.0% y/y to 743,935 MT. Big Picture Cocoa Market Factors: Bullish factors for cocoa include (1) the forecast by Radiant Solutions that "mid-crop growth will be minimal" for cocoa crops as weather conditions throughout the Ivory Coast and Ghana have been somewhat dry, and (2) strong cocoa consumption in Q1, which rose by +2.0% y/y to 121.129 MT in North America, by +3.3% y/y to 370,359 MT in Europe, and by +9.5% y/y to 208,388 MT in Asia. Bearish factors for cocoa include (1) ICCO's projection that the 2018/19 global cocoa surplus will widen to +39,000 MT from +9,000 MT in 2017/18, (2) the projection from Barry Callebaut, the world's biggest cocoa processor, that global supply may match demand in 2019 amid robust global cocoa output, and (3) ample current supplies after cocoa stockpiles held at ICE-monitored warehouses climbed to a 7-1/2 month high Thursday of 4.371 million bags.
July arabica coffee (KCN19) on Friday closed down by -0.20 (-0.21%) and July ICE robusta coffee (RMK19) closed down by -1 (-0.07%). Coffee prices on Friday gave up an early advance and closed lower after updated weather forecasts from Somar Meteorologia called for dry conditions in Brazil’s coffee-growing areas starting May 29. July NY coffee had rallied to a 3-1/2 week high Friday and July robusta coffee to a 1-week high on concern that heavy rain in Brazil will delay harvesting and the bean-drying of Brazil's coffee crop. Data from Somar Meteorologia showed that rainfall in Minas Gerais, Brazil's biggest coffee-growing region, was 50.3 mm in the past week, or 316% of the historical average. Also, Somar Meteorologia forecasts the chance of frost in the higher elevations of Minas Gerais from May 25 through the first week of June. In addition, current coffee supplies over the past month have declined as ICE-monitored coffee inventories dropped to a 7-month low of 2.43 mln bags Thursday, well below the 4-3/4 year high of 2.503 mln bags from Mar 25. Another negative for robusta coffee was Friday's forecast from the USDA's FAS that calls for Vietnam 2019/20 coffee output to increase by +0.3% y/y to 30.5 mln bags and exports to climb by +4.0% y/y to 28.3 mln bags. Vietnam is the world's biggest producer of robusta coffee beans. Weakness in the Brazilian real against the dollar is another negative factor for coffee prices after the real tumbled to 7-3/4 month low against the dollar on Monday, which encourages export selling by Brazil's coffee producers. Big Picture Coffee Market Factors: Bullish factors for coffee include (1) projections from Conab that Brazil 2019/20 coffee production will fall -18% y/y to 50.5 mln bags as the crop moves into the lower-yielding half of a 2-year cycle, and (2) USDA projections that global 2018/19 coffee consumption will climb +2.9% to a record 163.219 mln bags. Bearish factors include (1) the sell-off in the Brazilian real to a 7-3/4 month low against the dollar, which encourages export selling by Brazil's coffee producers, (2) ample supplies as ICO data showed that global 2018/19 coffee exports Oct-Mar rose +4.1% y/y to 63.15 mln bags, (3) ICO's hike in its forecast for a global 2018/19 coffee surplus to 3.7 mln bags from a prior view of 3.1 mln bags and its projection that a second year of surplus will depress coffee prices over the next few months, and (4) USDA projections for global 2018/19 coffee production to climb +7.1% y/y to a record 171.166 mln bags and for global 2018/19 coffee ending stocks to increase by +11.6% to a 3-year high of 32.812 mln bags.