- Softs Report 12/17/18
COTTON General Comments: Cotton was higher in reaction to news of a truce in the tariff wars between the US and China. The highs [...]
- 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...
Futures Market News and Commentary
Cotton futures were down 56 to 69 points in the nearby contracts on Tuesday. Crude oil saw sharp $3.64/barrel losses on the day, causing synthetics to pressure the cotton market lower. The Fed will announce whether they will raise interest rates on Wednesday afternoon. They are expected to hike short term rates by 0.25%, though future hikes are in question following Chairman Powell’s comments last month. President Trump is on record as saying no rate hike is needed from his perspective. The Cotlook A index was up 5 points from the previous day on Dec 17 at 87.80 cents/lb. The weekly USDA AWP was updated to 69.77, good through Thursday.Mar 19 Cotton closed at 77.850, down 69 points,May 19 Cotton closed at 79.040, down 68 pointsJul 19 Cotton closed at 80.080, down 56 points--provided by Brugler Marketing & Management
Mar ICE NY cocoa (CCH19) on Tuesday closed up by +41 (+1.84%) and Mar ICE London cocoa (CAH19) closed up +28 (+1.69%). Cocoa prices on Tuesday moved higher with Mar NY cocoa at a 5-week as tightness in current supplies fueled fund buying. ICE-monitored cocoa inventories have fallen steadily over the past 7 months and dropped to a new 1-3/4 year low of 3.329 mln bags on Monday. The upside in cocoa prices may be limited on signs of robust global cocoa production after Ivory Coast data on Monday showed that farmers sent 820,913 MT of cocoa to ports from Oct 1-Dec 16, up +23.4% from the same time last year. Also, last Tuesday's data from the Ghana Cocoa Board showed that purchases from Ghana cocoa farmers reached 322,945 MT during the first eight weeks of the harvest from Oct 5-Nov 29, up +41.7% y/y. In addition, 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, the world's top two cocoa producers.
Mar arabica coffee (KCH19) on Tuesday closed down -0.70 (-0.70%) and Mar ICE robusta coffee (RMH19) closed up +9 (+0.61%). Mar arabica coffee slumped to a 2-3/4 month low after Conab, Brazil's national supply agency, raised its Brazil 2018/19 coffee production estimate to a record 61.7 mln bags (+37% y/y) from a Sep forecast of 59.9 mln bags. Conab raised its Brazil arabica coffee production estimate to 47.5 mln bags from a Sep forecast of 45.9 mln bags and raised its Brazil robusta coffee production estimate to 14.2 mln bags from a prior estimate of 14 mln bags. The outlook is for abundant coffee supplies after the USDA last Friday raised its global 2018/19 coffee production estimate to 174.493 mln bags (+9.8% y/y) from June's estimate of 171.166 mln bags. The USDA also raised its global 2018/19 coffee ending stocks estimate to 37.056 mln bags (+23.7% y/y) from a June estimate of 32.812 mln bags. Fund short-covering helped robusta coffee close higher and recover further from last Friday's 2-1/2 year low after last Friday's Commitment of Traders data showed fund managers tripled their net-short positions in robusta coffee to an 8-week high of 10,248 contracts in the week ended Dec 11. On the positive side, Somar Meteorologia said rainfall in Minas Gerais, Brazil's biggest coffee-growing region, was 15.7 mm in the past week, or only 27% of the historical average. Another positive for coffee prices was the -9.7% y/y decline in U.S. Nov green coffee inventories to 6.082 mln bags. 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).
March NY world sugar #11 (SBH19) on Tuesday closed down -0.19 (-1.52%) and March ICE London white sugar (SWH19) closed down -3.70 (-1.09%). Sugar prices moved lower Tuesday with Mar NY sugar at a 2-1/2 month low and Mar London sugar at a 3-week low. A plunge in crude oil prices to a 1-1/4 year low Tuesday undercut ethanol prices, which may prompt Brazil's sugar producers to divert more cane-crushing toward sugar production than ethanol production, thus boosting sugar supplies. Another bearish factor for sugar is increased output from India, the world's second-biggest producer, after the Indian Sugar Mills Association reported Tuesday that India's sugar production during Oct 1-Dec 15 totaled 7.05 MMT, up from 6.90 MMT a year earlier. Sugar prices recovered from their worst levels after Rabobank cut its global 2018/19 surplus estimate to 0.5 MMT from a September estimate of 4.5 MMT. Sugar still has underlying support from last Tuesday's data from Unica showing that Brazil 2018/19 Center-South sugar production through Nov was down -25.8% y/y at 25.761 MMT, 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.