Softs this morning are higher: Mar sugar +0.07 (+0.53%), Dec coffee +0.75 (+0.64%), Dec cocoa +2 (+0.09%), and Dec cotton +0.71 (+0.90%). Softs on Thursday settled mostly higher: Mar sugar unch, Dec coffee +5.10 (+4.53%), Dec cocoa +30 (+1.34%), Dec cotton +2.17 (+2.82%). Mar sugar on Thursday closed little changed. Dec sugar on Wednesday slid to a 2-week low on negative carry-over from Tuesday after the USDA's FAS forecast 2018/19 sugar production in India, the world's second-largest sugar producer, may climb +5.2% y/y to a record 35.87 MMT. Mar sugar had posted a 9-1/2 month nearest-futures high last Wednesday on concern about smaller global production after Unica predicted that Brazil's Center South 2018/19 sugar production may fell -28% y/y to 26 MMT. Unica reported Brazil's Center-South 2018/19 sugar output through Sep was down -24.8% y/y at 22.273 MMT, with the amount of sugar converted to ethanol at 24.386 mln liters, up +25.1% y/y. Another positive was the rally in the Brazilian real to a 4-3/4 month high against the dollar on Oct 17, which reduces incentive for Brail' sugar producers to boost exports. Mar sugar on Sep 27 fell to a contract low and nearest-futures (V18) sank to a 10-year low on concern about bigger global supplies after India's government approved 55.38 billion rupees ($762 million) in subsidies to its sugar farmers, which may boost India's sugar exports by 5 MMT in the year starting Oct 1. Sugar prices had sold-off into late-Sep on signs of abundant global sugar supplies. ISO forecasts global 2018/19 sugar production will rise +0.6% y/y to a record 185.2 MMT and projects a global 2018/19 sugar surplus of 6.75 MMT, down from surplus of +8.6 MMT in 2017/18. The USDA's Foreign Agricultural Service (FAS) projects a record 2017/18 global sugar surplus of 10.73 MMT and record global 2017/18 sugar production of 184.95 MMT. The Thailand Office of Cane and Sugar Board reported Thailand 2017/18 sugar production rose to a record 14.47 MMT. Conab forecasts Brazil 2018/19 sugar production will fall -9.6% y/y to 34.25 MMT, a 3-year low.
Dec coffee on Thursday closed high as a decline in the dollar index to a 1-week low spurred fund short covering in coffee. Dec coffee on Wednesday fell to a 2-week low on signs of robust supplies. The International Coffee Organization (ICO) reported Thursday that global 2017/18 coffee exports rose +2% y/y to 121.9 mln bags. Also, ICE-monitored coffee inventories continue to climb and rose to a 4-year high of 2.448 mln bags on Tuesday. Dec coffee on Oct 19 rallied to an 8-3/4 month high nearest-futures high after the Brazilian real climbed to a 4-3/4 month high against the dollar, which reduces incentive for Brazil's coffee producers to boost exports. Coffee prices had sold-off over the past four months as Dec coffee fell to a contract low Sep 18 and nearest-futures (U18) posted a 12-3/4 year low on the outlook for ample supplies. The ICO reported global coffee exports from Oct-Aug were 112.5 mln bags, up +1.6% y/y. Conab raised its Brazil 2018 coffee production estimate to a record 59.9 mln bags from a prior estimate of 58 mln bags, up +33% y/y, as crops are in the higher-yielding half of their biennial cycle. The USDA on Jun 15 projected global 2018/19 coffee production will climb +7.1% y/y to a record 171.166 mln bags and global 2018/19 coffee ending stocks will increase by +11.6% to a 3-year high of 32.812 mln bags. Also, Vietnam coffee exports this year from Jan-Sep are up +19.6% y/y at 1.456 MMT. On the positive side, the USDA projects that global 2018/19 coffee consumption will climb +2.9% to a record 163.219 mln bags. Also, U.S. Sep green coffee inventories fell -10.5% y/y to 6.438 mln bags. In addition, ICO recently raised its global 2017/18 coffee deficit estimate to -3.5 mln bags from a previous estimate of -2.7 mln bags.
Dec cocoa prices on Thursday rallied to a 6-week high on signs of tighter supplies as ICE-monitored cocoa inventories have fallen steadily over the past six months down to a 9-1/4 month low on Wednesday of 3,840,290 bags. Also, concerns remain that cocoa exporters in the Ivory Coast are finding it harder to purchase beans as Ivory Coast banks tighten their lending standards after Ivory Coast cocoa processor Saf-Cacao defaulted on loans and was forced into liquidation. Signs of stronger global demand are also supportive for cocoa prices after the National Confectioners Association reported North American Q3 cocoa grindings unexpectedly rose +2.5% y/y to 128,494 MT, stronger than expectations for a -1% y/y decline. The European Cocoa Association reported that European Q3 cocoa grindings rose +2.7% y/y to 363,122 MT, the highest in 7 years. Conversely, Asia Q3 cocoa grindings rose +3.7% y/y to 196,418 MT, weaker than expectations of +5.1%. Also, current supplies have risen after the Ivory Coast reported farmers sent 250,704 MT of cocoa to ports from Oct 1-28, up +56.7% from the same time last year. The Ghana Cocoa Board said the 2017/18 cocoa crop in Ghana, the world's second largest, was 899,209 MT, down -7.2% y/y. Cocoa purchases from the Ghana Cocoa Board totaled 77,042 MT for the first 3 weeks of the 2018/19 harvest through Oct 25. Dec cocoa on Oct 1 sank to an 8-month nearest-futures low on harvest pressures from the Ivory Coast and Ghana main crops. Nearest-futures (U18) cocoa prices rallied to a 2-year high in May on signs of stronger global demand along with concern excessive dry conditions in West Africa would reduce Ivory Coast and Ghana cocoa yields. ICCO projects that 2017/18 global cocoa production will fall -2.0% y/y to 4.645 MMT and that the global cocoa surplus will fall to +31,000 MT from 2016/17's 6-year high surplus of 296,000 MT.
Dec cotton on Thursday moved higher on optimism that the U.S.- China trade rift can be resolved after President Trump said trade talks with Chinese President Xi Jinping are "moving along nicely." Cotton prices had been under pressure after Monday's USDA Crop Progress report showed the pace of the U.S. cotton harvest picked up and is now just above the 5-year average. Dec cotton last Thursday fell an 8-1/4 month nearest-futures low on fund selling fueled by speculation the recent slump in global stock prices will undercut economic growth and cotton demand. Also, Cotlook cut its global 2018/19 cotton deficit estimate to -664,000 MT from a previous estimate of -739,000 MT. Supplies are expected to tighten as the USDA projects global 2018/19 cotton ending stocks will fall to a 7-year low of 74.45 mln bales. Another bullish factor is concern about lower cotton production in India, the world's biggest cotton producer, after researcher Kotak Commodity Services said 2018/19 cotton production in India, may fall 4% y/y to 35 mln bales after India' monsoon rains were 9% below normal this year. India's 2017/18 cotton production rose to a 3-year high of 36.5 mln bales, according to data from the Cotton Association of India. The USDA projects U.S. 2018/19 cotton ending stocks will climb to an 11-year high of 5 mln bales. China Jan-Sep cotton imports were up +23.2% y/y at 1.1 MMT, although trade tensions between U.S. and China may limit China's demand for U.S. cotton going forward. The USDA projects that global 2018/19 cotton use will climb to a record high of 127.76 mln bales. Monday’s USDA Crop Progress report showed that 44% of the U.S. cotton crop was harvested as of Oct 28, +1 point ahead of the 5-year average.