- Weekend Wrap Up
What to expect from this weeks grain and livestock trade.
- Commercial Buying Preceding Seasonal Cotton Strength
The March cotton futures tend to close the year strongly. We expect this market to movehigher from here through year-end based on the growing commercial...
- Cotton Prices Trade Sharply Lower
- Negative Global Market Tone and Technical Trade Lead Cocoa Futures
Wednesdays trading session in cocoa pulled March futures down below 2100. At one point the market traded as low as 2095 testing key support levels
- Cotton (CT) Testing 6 Month Downtrend Resistance
Cotton (CT) is consolidating a 2nd day following Monday's strong rally that punctured a 6 month downtrend resistance (on the weekly chart). With CT...
- Softs Report 12/04/18
COTTON General Comments: Cotton was higher in reaction to news of a truce in the tariff wars between the US and China. The highs [...]
Futures Market Commentary
Cotton futures settled with most contracts 53 to 115 points higher, with new nearby March cotton up 1.67%. The USDA weekly Export Sales report showed all upland cotton 18/19 sales at 94,866 RB for the week of 11/29, down 46.34% from last week and 49.16% from last year. Vietnam purchased 31,900 RB, with Bangladesh at 28,300 RB. Net reductions of 30,292 RB were reported for China. Sales for the 19/20 crop totaled 80,520 RB, with China purchasing 28,160 RB. Upland export shipments were down 35.75% from a year ago, but up 25.69% from last week at 158,554 RB. Pima sales for 18/19 totaled 22,400 RB. The Cotlook A index was up 140 points from the previous day on Dec 6 at 89.20 cents/lb. The weekly USDA AWP is 69.34, up from 67.92 cents/lb the previous week. The new value is effective through next Thursday.Mar 19 Cotton closed at 80.230, up 115 points,May 19 Cotton closed at 81.170, up 91 pointsJul 19 Cotton closed at 81.730, up 61 points--provided by Brugler Marketing & Management
Mar ICE NY cocoa (CCH19) on Friday closed up sharply by +97 (+4.56%) and Mar ICE London cocoa (CAH19) closed up +61 (+3.89%). A weaker dollar Friday prompted fund short-covering in cocoa prices along with tightness in current cocoa supplies. ICE-monitored cocoa inventories have fallen steadily over the past 7 months to an 11-month low Friday of 3.394 mln bags. Cocoa prices on Wednesday sold off with NY cocoa at a 1-3/4 month low and London cocoa at a 1-week low on signs of robust cocoa production. Le Conseil du Cafe-Cacao, the Ivory Coast's cocoa regulator, sold an additional 200,000 MT of cocoa in Oct and Nov as Ivory Coast farmers harvested a bigger-than-expected crop. The recent sales lifted Ivory Coast's obligations for the bigger of the country's two annual harvests, which ends in March, to 1.7 MMT from 1.5 MMT. The Ivory Coast reported Monday that farmers sent 676,509 MT of cocoa to ports from Oct 1-Dec 2, up +34.2% from the same time last year. Also, the Ghana Cocoa Board reported last Friday that Ghana cocoa purchases totaled 261,162 MT during Oct 5-Nov 22, more than the year-earlier amount of 227,956 MT. Cocoa prices posted a 1-week high on Monday on positive carry-over from Nov 30 when ICCO cut its global 2017/18 cocoa surplus estimate to +22,000 MT from a previous estimate of +31,000 MT. ICCO also lowered its global 2017/18 cocoa production estimate to 4.638 MMT from a prior estimate of 4.645 MMT. In addition, ICCO sees stronger global demand as it raised its global 2017/18 cocoa grinding estimate to 4.57 MMT from 4.568 MMT, up +3.9% y/y.Big Picture Cocoa Market Factors: Bullish factors for cocoa include (1) strength in global demand with European Q3 cocoa grindings rising +2.7% y/y to a 7-year high of 363,122 MT and North American Q3 cocoa grindings rising +2.5% y/y to 128,494 MT, (2) ICCO projections for 2017/18 global cocoa production to fall -2.2% y/y to 4.638 MMT, and (3) tighter supplies as cocoa inventories held at port warehouses monitored by ICE Futures have steadily declined over the past 6 months and are near an 11-month low. Bearish factors for cocoa include (1) ICCO's forecast for a small global cocoa surplus of +22,000 MT in 2017/18, although that is down sharply from 2016/17's 6-year high surplus of 296,000 MT, (2) favorable growing conditions in West Africa that should boost cocoa yields in the Ivory Coast and Ghana, the world's two largest cocoa producers, (3) 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 (4) signs of robust cocoa production after Le Conseil du Cafe-Cacao, the Ivory Coast's cocoa regulator, sold an additional 200,000 MT of cocoa in Oct and Nov as Ivory Coast farmers harvested a bigger-than-expected crop. The recent sales lifted Ivory Coast's obligations for the bigger of the country's two annual harvests, which ends in March, to 1.7 MMT from 1.5 MMT.
Mar arabica coffee (KCH19) on Friday closed down -1.85 (-1.75%) and Mar ICE robusta coffee (RMH19) closed down -9 (-0.58%). Coffee prices tumbled to 2-month lows Friday on weakness in the Brazilian real along with signs of ample supplies. The real dropped to a 2-month low Thursday, which provides incentive for Brazil's coffee producers to boost exports. Also, comments Thursday from Jose Sette, Executive Director of the International Coffee Organization (ICO), weighed on coffee prices when he said any recovery in global coffee prices in 2018/19 is likely to be limited as the market enters a "period of oversupply." ICO data on Monday showed global arabica coffee exports in the 12 months through October were up +2.4% y/y at 77.6 mln bags and that global robusta coffee exports jumped +7.6% y/y to 46 mln bags. Robusta coffee prices remained under pressure after the USDA's FAS on Tuesday raised its Vietnam 2018/19 coffee production estimate to 30.4 mln bags from a previous estimate of 29.9 mln bags because of beneficial weather. Ideal weather is another negative for robusta coffee prices as Vietnam's National Center for Hydro-Meteorological Forecasting said on Monday that it sees above-average rainfall in December for the Central Highlands, Vietnam's biggest coffee-producing region. Coffee supplies remain ample and are just below the recent 4-year high of 2.459 mln bags (Nov 19).Big Picture Coffee Market Factors: Bullish factors for coffee include (1) ICO's forecast for a 2017/18 global coffee deficit of -3.5 mln bags, 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) ample supplies as ICO data showed global 2017/18 coffee exports rose +2% y/y to 121.9 mln bags, (2) Conab projections for Brazil's 2018 coffee production to climb +33% y/y to a record 59.9 mln bags as crops are in the higher-yielding half of their biennial cycle, (3) 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, (4) the slump in the Brazilian real to a 3-year low against the dollar in September, which incentivizes Brazil's coffee producers to increase exports, and (5) comments from Jose Sette, Executive Director of the International Coffee Organization (ICO), who said any recovery in global coffee prices in 2018/19 is likely to be limited, as the market enters a "period of oversupply."
March NY world sugar #11 (SBH19) on Friday closed up by +0.23 (+1.82%) and March ICE London white sugar (SWH19) closed up +4.00 (+1.17%). Sugar prices moved higher Friday with NY sugar at a 1-week high on positive carry-over from a rally in crude prices, which benefits ethanol prices and may prompt Brazil's sugar producers to divert more cane-crushing toward sugar production rather than ethanol. Also, Petrobras on Friday raised the wholesale price of gasoline in Brazil to 1.5585 reals/liter from 1.5339 reals/liter, which is supportive for ethanol prices. Sugar prices fell back from their best levels Friday on weakness in the Brazilian real. The real on Thursday tumbled to a 2-month against the dollar, which encourages Brazil’s sugar producers to boost exports, thus increasing global supplies. Further gains in London white sugar may be forthcoming on technical factors after London sugar closed above its 200-day moving average Friday.Big Picture Sugar Market Factors: Bullish factors for sugar include (1) concern about smaller global production after Unica forecasted that Brazil's Center South 2018/19 sugar production will fall -28% y/y to 26 MMT, and (2) generally strong global demand. Bearish factors include (1) ISO's forecast that global 2018/19 sugar production will rise +0.6% y/y to a record 185.2 MMT and that there will be a 2018/19 sugar surplus of 2.2 MMT (vs 2017/18's 7.3 MMT), (2) USDA's FAS forecast for 2018/19 sugar production in India, the world's second-largest sugar producer, to climb +5.2% y/y to a record 35.87 MMT, (3) record sugar output from Thailand, the world's fourth-largest sugar producer, after the Thailand Office of Cane and Sugar Board reported that Thailand 2017/18 sugar production rose to a record 14.47 MMT, (4) the plunge in crude oil prices to a 13-3/4 month low in late-Nov, which is negative for ethanol prices and may prompt Brazil's sugar mills to divert less cane to making ethanol, thus increasing sugar supplies.