Softs

Softs this morning are mixed with Mar sugar -0.01 (-0.07%), Dec coffee -0.35 (-0.28%), Dec cocoa -3 (-0.14%), and Dec cotton +0.20 (+0.29%). Softs on Thursday settled mixed: Mar sugar +0.04 (+0.27%), Dec coffee +0.65 (+0.52%), Dec cocoa -18 (-0.81%), Dec cotton -0.33 (-0.48%). Mar sugar on Thursday jumped to a 3-1/4 month nearest-futures high after researcher Datagro forecast Brazil 2018/19 sugar production at 32.6 MMT, down -10.4% y/y from 36.4 MMT in 2017/18. Also, the rally in crude oil prices Monday to a 2-1/3 year high is prompting fund short-covering on speculation Brazil's sugar mills may divert more sugar supplies toward ethanol production with the higher crude and gasoline prices. Current supplies remain ample after Unica reported that sugar production in the first half of Oct in Brazil's Center-South through mid-Oct was up +3.57% y/y at 31.214 MMT. Also, India projects that its 2017/18 sugar crop will increase by +23% y/y to 25 MMT, the first gain in 3 years. In addition, the Thai Sugar Millers Corp. predicted that 2017/18 Thailand sugar production may climb +10% y/y to 11 MMT, a 6-year high. ISO projects a global 2017/18 sugar surplus of 3 MMT, following the global 2016/17 deficit of -6.465 MMT.

Dec coffee prices on Thursday closed higher after Brazil Oct coffee exports fell -11.1% y/y to 2.644 mln bags, the fifth straight month Brazil's coffee exports have fallen year-over-year. Dec coffee fell to a 4-1/2 month nearest-futures low on robust supplies. ICO data shows Oct-Sep global coffee exports are up +4.8% y/y to 122.45 mln bags and ICE-monitored coffee inventories Friday rose to a 2-year high of 1.926 million bags. Also, the ICO Tuesday revised up its global 2016/17 coffee ending stocks estimate to a surplus of 2.38 mln bags from a forecast last month for a deficit of -1.2 mln bags. That surplus would be the first in 3 years. The ICO also raised its global 2016/17 coffee production estimate to a record 157.44 mln bags from a prior estimate of 153.9 mln bags. Finally, recent data from the Green Coffee Association showed U.S. Sep coffee inventories rose +16% y/y to 7.19 mln bags, just below the 23-1/3 year high of 7.413 mln bags from Jul. Brazil's 2017 coffee output according to Confab may fall as much as -15% to 43.7 mln bags from 51.4 mln bags in 2016 since crops are in their lower-yielding half of their 2-year cycle.

Dec cocoa prices on Thursday fell back modestly as they consolidated recent gains. Dec cocoa on Wednesday had posted a 9-3/4 month nearest-futures high on fund buying due to signs of stronger global chocolate demand after Barry Callebaut, maker of 25% of the world's chocolate, reported a +9.2% increase in volume in the three months through Aug. Cocoa prices were already in rally mode as ICE-monitored cocoa inventories have trended lower over the past 4 months down to an 8-1/2 month low Wednesday. Current cocoa output appears robust after Ghana, the world's second-largest producer, said its 2016/17 cocoa production rose +24% y/y to 969,438 MT, a 6-year high. Cocoa demand is generally strong with Q3 Asia cocoa grindings up +13% y/y to 167,737 MT, European Q3 cocoa grindings up +3% y/y to 353,544 MT, and Q3 North American cocoa grindings up +0.7% y/y to 125,263 MT. 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. ICCO says 2016/17 global cocoa production reached a record 4.7 MMT, resulting in a 6-year-high global 2016/17 surplus of +371,000 MT.

Dec cotton on Thursday fell back from a 2-week high and closed lower after the USDA in Thursday's WASDE report unexpectedly raised its U.S. 2017/18 cotton production estimate to an 11-year high of 21.4 mln bales, more than expectations of a cut to 20.9 mln bales, and raised its global 2017/18 cotton production estimate to a 5-year high of 12.46 MMT from an Oct estimate of 120.8 MMT. The USDA also unexpectedly raised its U.S. 2017/18 cotton ending stocks estimate to a 9-year high of 6.1 mln bales, more than expectations of a cut to 5.5 mln bales. Dec cotton Tuesday fell to a 1-week low as the pace of the U.S. cotton harvest picked up. Monday's USDA Crop Progress report showed 54% of the U.S. cotton crop harvested as of Nov 5, just below the 5-year average of 55%. A positive for cotton is strength in Chinese cotton demand as Chinese customs data show China Jan-Sep cotton imports up +37.7% y/y to 904,500 MT.