- Weekend Wrap Up (Grains & Livestock)
Our outlook, market bias, and technical levels to watch this week.
- Raw Sugar (SB) Consolidating Above 50% Fib Retrace of Oct Rally
Raw Sugar (SB) is edging higher late in today's US session, continuing a month plus consolidation between the 50% and 38.2% Fib retrace of the 3 week...
- 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
Futures Market News and Commentary
Cotton futures saw 19 to 32 point gains on Friday. Cotton commitments for export are now lagging a year ago by 2.5%. Compared to the USDA projected 15 million bales, they are 71% of that number vs. the 62% average for early December. Money managers in cotton futures and options trading added a net of just 85 contracts to their net long position as of 12/11 at 38,187 contracts. The Cotlook A index was down 5 points from the previous day on Dec 13 at 88.25 cents/lb. The weekly USDA AWP was updated to 69.77, good through next Thursday and up 43 points from the previous week.Mar 19 Cotton closed at 79.600, up 19 points,May 19 Cotton closed at 80.670, up 24 pointsJul 19 Cotton closed at 81.340, up 32 points--provided by Brugler Marketing & Management
Mar ICE NY cocoa (CCH19) on Friday closed down -13 (-0.58%) and Mar ICE London cocoa (CAH19) closed down -9 (-0.54%). Cocoa prices on Friday posted 1-month highs but fell back and closed lower on pre-weekend profit taking. Signs of tighter cocoa supplies earlier fueled fund buying in cocoa over the past three sessions to a 1-month high Friday. ICE-monitored cocoa inventories have fallen steadily over the past 7 months to a 1-3/4 year low Thursday of 3.349 mln bags. Mar NY cocoa posted a 1-week low Tuesday on signs of robust global cocoa production after Ivory Coast data Monday showed that farmers sent 753,549 MT of cocoa to ports from Oct 1-Dec 9, up +29.7% from the same time last year. Also, data from the Ghana Cocoa Board showed purchases from Ghana cocoa farmers, the world's second-biggest cocoa producers, reached 322,945 MT during the first eight weeks of the harvest from Oct 5-Nov 29, up +41.7% y/y. World Weather said the annual Harmattan winds are off to a slow start this year in West Africa and predicted the El Nino weather pattern is looking weaker, which is positive for cocoa crops in Ivory Coast and Ghana. 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 7 months and are at a 1-3/4 year 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.
March NY world sugar #11 (SBH19) on Friday closed down -0.10 (-0.78%) and March ICE London white sugar (SWH19) closed down -2.20 (-0.64%). Sugar prices moved lower Friday due to a slide in crude oil prices and a stronger dollar as the dollar index jumped to a 1-1/2 year high. Sugar prices posted a 2-week low Thursday after researcher Marex Spectron warned that unless crude oil rallies, sugar's upside will be capped by lower ethanol parity in Brazil. Weaker ethanol prices may prompt Brazil's sugar producers to divert more cane-crushing toward sugar production than ethanol production, which will boost sugar supplies. Sugar still has underlying support from Tuesday's data from Unica showing that Brazil 2018/19 Center-South sugar production through Nov was 25.761 MMT, down -25.8% y/y, and that the percent of cane crushing for sugar output fell to 35.71% from 47.12% y/y while cane crushing for ethanol production rose to 64.29% from 52.88% y/y.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.
Mar arabica coffee (KCH19) on Friday closed down -1.85 (-1.78%) and Mar ICE robusta coffee (RMH19) closed down -34 (-2.26%). Coffee prices moved lower for a second day Friday and Mar Robusta coffee sold off to a 2-1/2 year low. Mar arabica coffee posted a 2-1/2 month low Thursday as signs of abundant supplies spurred fund selling of coffee. ICO data on Monday showed that global 2017/18 arabica coffee output rose +1.7% y/y to 101.3 mln bags and 2017/18 robusta coffee production rose +10.0% y/y to 62.3 mln bags. Cecafe reported Tuesday that Brazil Nov green coffee exports jumped +26% y/y to 3.424 mln bags, the highest ever for a November, with Nov arabica coffee exports up +18% y/y to 3.19 mln bags. Robusta coffee supplies are also abundant as data from Vietnam's General Department of Customs on Tuesday showed Vietnam Nov coffee exports rose +32% y/y to 138,138 MT, and Vietnam Jan-Nov coffee exports were up +2.8% y/y at 1.72 MMT. On the positive side, the U.S. Climate Prediction Center on Thursday raised its estimate for an El Nino weather pattern forming by the end of February to 91% from an 80% estimate in November, which may lead to hotter and drier conditions in South America. Also, Somar Meteorologia said rainfall in Minas Gerais, Brazil's biggest coffee-growing region, was 27.7 mm in the past week, or only 43% of the historical average. Current coffee supplies remain ample as ICE-monitored coffee inventories 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."