Softs
Softs this morning are mixed with Mar sugar -0.09 (-0.63%), Dec coffee +0.40 (+0.31%), Dec cocoa unch, and Dec cotton unch. Softs on Thursday settled mixed: Mar sugar +0.14 (+0.98%), Dec coffee +2.05 (+1.64%), Dec cocoa +6 (+0.29%), Dec cotton -0.53 (-0.77%). Mar sugar on Thursday posted a 1-week high as they followed gasoline prices higher. Higher gasoline prices benefits ethanol prices and gives incentive for Brazil's sugar producers to divert more sugar supplies to ethanol production, thus shrinking sugar stockpiles. Sugar supplies remain abundant as Unica reported that Brazil 2017/18 Center-South sugar production through mid-Sep was 26.386 MMT, up +5.88% y/y. Also, India projects that its 2017/18 sugar crop will increase by +23% y/y to 25 MMT, the first gain in 3 years. Nearest-futures (V17) fell to a 1-1/2 year low Jun 28 as signs of robust supplies hammered sugar prices. Researcher F.O. Licht cut its global 2016/17 sugar deficit estimate to -4.2 MMT from a prior estimate of -5.5 MMT and raised its 2017/18 global sugar surplus estimate to 4.6 MT from a May forecast of 2.7 MMT, due to an unexpected surge in Pakistan sugar production. In addition, ISO projects a global 2017/18 sugar surplus of 3 MMT from a 2016/17 deficit of -6.465 MMT. Researcher Wilmar predicts Thailand 2017/18 sugar production may climb to a record 12 MMT.

Dec coffee prices on Thursday fell to a new 3-1/4 month nearest-futures low, but recovered their losses and closed higher after the ICO reported that Aug global coffee exports fell -8.4% y/y to 9.87 mln bags. Supplies remain ample as ICE-monitored coffee inventories rose to a 1-3/4 year high of 1.829 million bags on Wednesday, and recent data from the Green Coffee Association showed U.S. Aug coffee inventories rose +17.2% y/y to 7.266 mln bags, just below the 23-1/3 year high of 7.413 mln bags from Jul. Also, ICO data shows Oct-Aug global coffee exports are up +5.8% y/y to 113.3 mln bags. Nearest-futures (U17) coffee on Aug 8 jumped to a 6-1/4 month high on Brazil coffee crop concerns after Somar Meteorolgia said rainfall had been well below normal in Brazil’s coffee-growing regions. Dec coffee on Jun 22 plunged to a contract low and nearest-futures (N17) sank to a 1-1/2 year low on signs of robust supplies. ICO also hiked its global 2016/17 coffee production estimate to a record 153.9 mln bags from a prior estimate of 151.6 mln bags. However, supplies may tighten up since Confab said it sees Brazil's 2017 coffee output falling as much as 15% to 43.7 mln bags from 51.4 mln bags in 2016 as crops are in their lower-yielding half of their 2-year cycle. Also, Carafe predicts that Brazil 2017 coffee exports will fall -5.9% y/y to 32 million bags due to a lower-yielding coffee crop.

Dec cocoa prices on Thursday closed higher, but remained below Wednesday's 6-month nearest-futures high. Cocoa rallied to that high on fund short-covering after ICE-monitored cocoa inventories fell to a 6-1/4 month low Wednesday. Signs of robust future supplies may limit further upside in cocoa prices after 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. Also, the Executive Director of the ICO recently said that the global cocoa surplus may persist for the next 4 to 5 years if cocoa production remains at current levels. In addition, Ghana, the world's second-biggest cocoa producer, reported its 2016/17 cocoa crop had risen to 953,865 MT as of Sep 28, a 6-year high. Demand is weak as Q2 North American cocoa grindings unexpectedly fell -1.1% to 123,125 MT, weaker than expectations of a +2.2% increase to 127,170 MT. Q2 European cocoa processing rose +2.1% y/y to 331,850 MT, weaker than expectations of +3.0% y/y, and Q2 Asian cocoa processing rose +9.9% to 160,878 MT, weaker than expectations of +12% y/y. The ICCO last month raised its 2016/17 global cocoa production estimate to a record 4.7 MMT from 4.692 MMT in Jun, and lowered its global 2016/17 surplus estimate to +371,000 MT from a 382,000 MT estimate in Jun, still the biggest surplus in 6-years.

Dec cotton on Thursday closed lower on weakness in foreign demand for U.S. cotton after the USDA reported 189.6 bales of U.S. upland cotton sold the week of Sep 28, down -6.5% w/w. Dec cotton on Wednesday jumped to a 1-week high on fund short-covering after the U.S. National Hurricane Center said a tropical depression may strengthen into a hurricane and could make landfall near Louisiana by Sunday, which may bring heavy rains to the U.S. South that damages the U.S. cotton crop. Dec cotton on Tuesday had fallen to a 1-1/4 month low as the pace of the U.S. cotton harvest picked up. Monday's USDA Crop Progress report showed 17% of the U.S. cotton crop harvested as of Oct 1, +4 points above the 5-year average of 13%. The USDA expects a bumper U.S. cotton crop as it unexpectedly raised its U.S. 2017/18 cotton production estimate in the Sep 12 WASDE report to a 12-year high of 21.76 mln bales. Strength in U.S. exports is drawing down U.S. cotton stockpiles, led by exceptional Chinese demand, as China Jan-Aug cotton imports are up +36% y/y to 811,800 MT. Dec cotton rallied to a contract high and nearest-futures (V17) cotton posted a 4-month high on Sep 8 on concerns that heavy rains from Hurricane Irma would damage U.S. cotton crops that had already seen huge rains from Hurricane Harvey.