Forex 2020
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Cotton futures are down 18 to 100 points this Monday morning. They pulled back from intraday highs, but futures still closed higher on Friday. Old crop prices ended the session 99 to 108 points higher, and new crop prices ended up by 60 to 75 points. USDA’s cash average price for cotton was a penny lower to 68 cents/lb.
The weekly data release from CFTC showed cotton spec traders were 51,982 contracts net long on 4/6. That was down 2,153 contracts wk/wk.
USDA’s April WASDE shrank carryout to 3.9 million. Globally, cotton carryout was 1.13m bales tighter to 93.46 million. Exports were 940k bales higher which slightly reduced the U.S. market share to 34.63%.
USDA’s weekly cotton market review showed 7,787 bales were sold at spot for an average selling price of 74.97 cents/lb. The Cotlook A index for 4/8 was 25 points higher at 86.60 cents/lb. USDA’s new AWP for cotton for the week is 67 points lower at 64.92 cents/lb.
Sugar : May NY world sugar #11 (SBK21) on Friday closed up +0.28 (+1.84%), and May London white sugar #5 (SWK21) closed down -2.20 (-0.52%).
Sugar prices on Friday settled mixed, with NY sugar at a 2-week high. NY sugar had support on strength in foreign demand for Brazil's ethanol supplies. Brazil's Trade Ministry reported Thursday that Brazil's Jan-Mar ethanol exports rose +82% y/y to 548 mln liters, the highest in 5 years for this period. The stronger demand may prompt Brazil's sugar mills to divert more cane crushing toward ethanol production rather than sugar production, thus reducing sugar supplies.
Sugar prices continue to be undercut by concern the resurgence of the pandemic will keep pandemic restrictions in place that crimp fuel demand and encourage Brazil's sugar mills to divert more cane crushing toward sugar production rather than ethanol production, thus boosting sugar supplies. Brazil on Thursday reported a record 4,249 deaths from Covid, and India reported a record 132,000 new Covid infections. Also, the U.S. reported 79,661 new Covid infections on Thursday, the most in 7 weeks, and Japanese Prime Minister Suga said today the government is reimposing pandemic restrictions in Tokyo, Kyoto, and Okinawa for four weeks due to the recent surge in Covid infections.
Sugar prices were also undercut by last Thursday's news that India's sugar output in Oct-March rose +19% y/y to 27.76 MMT from 23.3 MMT a year earlier due to a bumper crop and increased cane crushing. The India Sugar Trade Association on Feb 11 forecast that 2020/21 India sugar production will increase +9% y/y to 29.9 MMT. However, in a supportive factor for sugar prices, the Indian Sugar Mills Association (ISMA) said that India's sugar mills had contracted only 4.5-4.6 MMT of sugar exports this year, below the government's export target of 6 MMT due to a shortage of shipping containers.
Signs of abundant global sugar production are negative for prices. Unica reported March 18 that Brazil's Center-South sugar production from Oct through mid-Mar was up +44% y/y to 38.287 MMT. The percentage of cane used for sugar rose to 46.16% in 2020/21 from 34.38% in 2019/20. Also, researcher Datagro on March 10 projected that the global sugar market in 2021/22 would shift to a surplus of +1.1 MMT after a -2.6 MMT deficit in 2020/21.
Sugar prices have underlying support from concern about the possibility of reduced sugar exports from Brazil. On Feb 22, Brazil reported that current shipping delays for its soybean exports might curb global sugar supplies because the queue of vessels waiting at Brazilian ports is so large that bottlenecks will likely continue until May when sugar is normally the biggest crop for export.
Sugar also has support from falling production in Thailand, the world's second-largest sugar exporter. The Thailand Office of the Cane & Sugar Board reported March 17 that Thailand's 2020/21 sugar production from Dec 10-Mar 15 fell -8.2% y/y to 7.5 MMT.
Big Picture Sugar Market Factors: World sugar production in 2020/21 (Apr/Mar) climbed +0.9% y/y to 171.1 MMT after falling -8.4% in 2019/20 to 169.6 MMT (ISO). The world sugar deficit in 2020/21 widened to a -4.8 MMT deficit from a +900,000 MT surplus in 2019/20 (ISO). Sugar production by Brazil, the world's largest sugar producer, in 2020/21 (Apr/Mar) climbed by +32% y/y to 39.3 MMT from 29.8 MMT in 2019/20, as millers diverted 46.4% of cane juice to produce sugar (up from 34.9% in 2019/20) due to the weak outlook for ethanol demand and prices (Conab). Sugar production by India, the world's second-largest sugar producer, climbed +13% y/y to 31 MMT in 2020/21 due to a good monsoon season (India's Sugar Mills Association).
Cocoa: May ICE NY cocoa (CCK21) on Friday closed down -1 (-0.04%), and May ICE London cocoa #7 (CAK21) closed down -43 (-2.62%).
Cocoa prices on Friday moved lower, with NY cocoa falling to a 5-month low and London cocoa falling to a 4-month nearest-futures low. The outlook for bumper cocoa crops in West Africa undercut cocoa prices and fueled fund selling in cocoa futures. Cocoa farmers in the Ivory Coast and Ghana are reporting favorable growing conditions that bode well for the mid-crop harvest that just began.
Cocoa supplies are ample from the Ivory Coast, the world's largest cocoa producer. The Ivory Coast government reported Thursday that cumulative cocoa bean deliveries to Ivory Coast ports during Oct 1-Apr 4 were unchanged y/y at 1.78 MMT. Also, current inventories are abundant after ICE-monitored cocoa inventories climbed to a 1-3/4 year high on Friday.
Demand concerns are also weighing on cocoa prices. Chocolate demand in Europe may suffer after France, Italy, and Germany all widened their pandemic lockdown measures in an attempt to contain the third wave of Covid.
A negative factor for cocoa was the February 26 projection from the International Cocoa Organization (ICCO) that global 2020/21 cocoa production will climb +2.5% y/y to 4.8 MMT and that the global 2020/21 cocoa surplus will widen to +102.000 MT from +10,000 MT in 2019/20.
The outlook for ample cocoa supplies is bearish for prices. On January 29, Marex Spectron projected that the global 2020/21 cocoa surplus would widen to +190,000 MT from +8,000 MT in 2019/20. Marex Spectron also projects global 2020/21 cocoa production will increase +5.4% y/y to 4.9 MMT due to a bumper crop in the Ivory Coast.
A supportive factor for cocoa was Citigroup's action on Tuesday to cut its global 2020/21 cocoa surplus estimate to +150,000 MT from a prior estimate of +275,000 MT.
Stronger global cocoa demand is supportive of cocoa prices after data March 11 from exporter group Gepex, a group of six of the world's biggest cocoa grinders, showed Gepex Feb cocoa processing rose +1.8% y/y to 45,087 MT.
Cocoa prices found support on better-than-expected Asian and North American Q4 grinding data. Data on January 15 showed Asia Q4 cocoa grindings fell -4.2% y/y to 217,546 MT, a smaller decline than expectations of -9% y/y. Also, North American Q4 cocoa processing unexpectedly rose +7% y/y to 118,043 MT, stronger than expectations of a decline of -2.5% y/y and the highest for a fourth-quarter in 5 years. However, the European Cocoa Association reported January 20 that Q4 European cocoa grindings fell -3.1% y/y to 344,151 MT, a bigger decline than expectations of -1.5% y/y and the weakest report for a fourth-quarter in 4 years.
The weekly data release from CFTC showed cotton spec traders were 51,982 contracts net long on 4/6. That was down 2,153 contracts wk/wk.
USDA’s April WASDE shrank carryout to 3.9 million. Globally, cotton carryout was 1.13m bales tighter to 93.46 million. Exports were 940k bales higher which slightly reduced the U.S. market share to 34.63%.
USDA’s weekly cotton market review showed 7,787 bales were sold at spot for an average selling price of 74.97 cents/lb. The Cotlook A index for 4/8 was 25 points higher at 86.60 cents/lb. USDA’s new AWP for cotton for the week is 67 points lower at 64.92 cents/lb.
Sugar : May NY world sugar #11 (SBK21) on Friday closed up +0.28 (+1.84%), and May London white sugar #5 (SWK21) closed down -2.20 (-0.52%).
Sugar prices on Friday settled mixed, with NY sugar at a 2-week high. NY sugar had support on strength in foreign demand for Brazil's ethanol supplies. Brazil's Trade Ministry reported Thursday that Brazil's Jan-Mar ethanol exports rose +82% y/y to 548 mln liters, the highest in 5 years for this period. The stronger demand may prompt Brazil's sugar mills to divert more cane crushing toward ethanol production rather than sugar production, thus reducing sugar supplies.
Sugar prices continue to be undercut by concern the resurgence of the pandemic will keep pandemic restrictions in place that crimp fuel demand and encourage Brazil's sugar mills to divert more cane crushing toward sugar production rather than ethanol production, thus boosting sugar supplies. Brazil on Thursday reported a record 4,249 deaths from Covid, and India reported a record 132,000 new Covid infections. Also, the U.S. reported 79,661 new Covid infections on Thursday, the most in 7 weeks, and Japanese Prime Minister Suga said today the government is reimposing pandemic restrictions in Tokyo, Kyoto, and Okinawa for four weeks due to the recent surge in Covid infections.
Sugar prices were also undercut by last Thursday's news that India's sugar output in Oct-March rose +19% y/y to 27.76 MMT from 23.3 MMT a year earlier due to a bumper crop and increased cane crushing. The India Sugar Trade Association on Feb 11 forecast that 2020/21 India sugar production will increase +9% y/y to 29.9 MMT. However, in a supportive factor for sugar prices, the Indian Sugar Mills Association (ISMA) said that India's sugar mills had contracted only 4.5-4.6 MMT of sugar exports this year, below the government's export target of 6 MMT due to a shortage of shipping containers.
Signs of abundant global sugar production are negative for prices. Unica reported March 18 that Brazil's Center-South sugar production from Oct through mid-Mar was up +44% y/y to 38.287 MMT. The percentage of cane used for sugar rose to 46.16% in 2020/21 from 34.38% in 2019/20. Also, researcher Datagro on March 10 projected that the global sugar market in 2021/22 would shift to a surplus of +1.1 MMT after a -2.6 MMT deficit in 2020/21.
Sugar prices have underlying support from concern about the possibility of reduced sugar exports from Brazil. On Feb 22, Brazil reported that current shipping delays for its soybean exports might curb global sugar supplies because the queue of vessels waiting at Brazilian ports is so large that bottlenecks will likely continue until May when sugar is normally the biggest crop for export.
Sugar also has support from falling production in Thailand, the world's second-largest sugar exporter. The Thailand Office of the Cane & Sugar Board reported March 17 that Thailand's 2020/21 sugar production from Dec 10-Mar 15 fell -8.2% y/y to 7.5 MMT.
Big Picture Sugar Market Factors: World sugar production in 2020/21 (Apr/Mar) climbed +0.9% y/y to 171.1 MMT after falling -8.4% in 2019/20 to 169.6 MMT (ISO). The world sugar deficit in 2020/21 widened to a -4.8 MMT deficit from a +900,000 MT surplus in 2019/20 (ISO). Sugar production by Brazil, the world's largest sugar producer, in 2020/21 (Apr/Mar) climbed by +32% y/y to 39.3 MMT from 29.8 MMT in 2019/20, as millers diverted 46.4% of cane juice to produce sugar (up from 34.9% in 2019/20) due to the weak outlook for ethanol demand and prices (Conab). Sugar production by India, the world's second-largest sugar producer, climbed +13% y/y to 31 MMT in 2020/21 due to a good monsoon season (India's Sugar Mills Association).
Cocoa: May ICE NY cocoa (CCK21) on Friday closed down -1 (-0.04%), and May ICE London cocoa #7 (CAK21) closed down -43 (-2.62%).
Cocoa prices on Friday moved lower, with NY cocoa falling to a 5-month low and London cocoa falling to a 4-month nearest-futures low. The outlook for bumper cocoa crops in West Africa undercut cocoa prices and fueled fund selling in cocoa futures. Cocoa farmers in the Ivory Coast and Ghana are reporting favorable growing conditions that bode well for the mid-crop harvest that just began.
Cocoa supplies are ample from the Ivory Coast, the world's largest cocoa producer. The Ivory Coast government reported Thursday that cumulative cocoa bean deliveries to Ivory Coast ports during Oct 1-Apr 4 were unchanged y/y at 1.78 MMT. Also, current inventories are abundant after ICE-monitored cocoa inventories climbed to a 1-3/4 year high on Friday.
Demand concerns are also weighing on cocoa prices. Chocolate demand in Europe may suffer after France, Italy, and Germany all widened their pandemic lockdown measures in an attempt to contain the third wave of Covid.
A negative factor for cocoa was the February 26 projection from the International Cocoa Organization (ICCO) that global 2020/21 cocoa production will climb +2.5% y/y to 4.8 MMT and that the global 2020/21 cocoa surplus will widen to +102.000 MT from +10,000 MT in 2019/20.
The outlook for ample cocoa supplies is bearish for prices. On January 29, Marex Spectron projected that the global 2020/21 cocoa surplus would widen to +190,000 MT from +8,000 MT in 2019/20. Marex Spectron also projects global 2020/21 cocoa production will increase +5.4% y/y to 4.9 MMT due to a bumper crop in the Ivory Coast.
A supportive factor for cocoa was Citigroup's action on Tuesday to cut its global 2020/21 cocoa surplus estimate to +150,000 MT from a prior estimate of +275,000 MT.
Stronger global cocoa demand is supportive of cocoa prices after data March 11 from exporter group Gepex, a group of six of the world's biggest cocoa grinders, showed Gepex Feb cocoa processing rose +1.8% y/y to 45,087 MT.
Cocoa prices found support on better-than-expected Asian and North American Q4 grinding data. Data on January 15 showed Asia Q4 cocoa grindings fell -4.2% y/y to 217,546 MT, a smaller decline than expectations of -9% y/y. Also, North American Q4 cocoa processing unexpectedly rose +7% y/y to 118,043 MT, stronger than expectations of a decline of -2.5% y/y and the highest for a fourth-quarter in 5 years. However, the European Cocoa Association reported January 20 that Q4 European cocoa grindings fell -3.1% y/y to 344,151 MT, a bigger decline than expectations of -1.5% y/y and the weakest report for a fourth-quarter in 4 years.
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