Grains may have struggled on Wednesday, but soft
commodities, broadly, gained as they absorbed a cocktail of Brazilian factors.
While grains declined, depressed by more-generous-than-expected
supply data in the US Department of Agriculture's monthly Wasde briefing, New York-trade
arabica coffee futures added 0.6% to 127.60 cents a pound for September
The gains were assisted by the tailwind of a strengthening real, which added 1.3% against the dollar, so boosting the value in dollar
terms of assets such as coffee in which Brazil is a major force.
But there were also data from exporters' association Cecafé showing
overall Brazilian coffee exports down 13.7% at 1.81m bags last month,
This despite last year's strong coffee harvest – but this
was centred on arabica beans, with robusta output remaining drought-depressed.
Indeed, Brazil's robusta
coffee exports last month were the lowest since 1990, said Cecafe.
London-traded robusta futures added 1.2% to $2,097 a tonne
for September delivery.
On the less positive side for arabica beans in particular, Jorge
Narvaez, Mexico's vice-minister of agriculture, forecast the country's coffee
output tripling over 15 years, with gains seen fuelled by yield improvements.
The stronger Brazilian real also helped raw sugar futures for October gain 0.4% to 14.25 cents a pound - helped
too by data from Brazilian cane industry group Unica showing output of the
sweetener from the country's key Centre South district hitting 2.97m tonnes in
the second half of last month.
While representing a rise of 169,000 tonnes on the same
period last year, the figure was marginally lower than the 2.995m-tonne
production result expected by investors, as polled by S&P Global Platts.
Still, this reflected a weaker cane harvest, down 1.4% year
on year at 47.55m tonnes for the fortnight, rather than any predilection by
Centre South ills for cutting the proportion of crop turned into sugar rather
Indeed, mills converted 50.5% of cane into sugar, up 0.5
points year on year, and a touch ahead of the 50.4% figure that investors had
ended 0.2% higher at $1,821 a tonne in New York for September delivery, offered
some support by a decision by Cote d'Ivoire regulator the Coffee and Cocoa
Council to end forward 2017-18 sales of the beans next month, a month earlier
than had been expected.
The decision reportedly reflected ideas that flood damage
would stem early supplies of the beans in 2017-18, which starts in October.
In fact, softs analyst Judy Ganes-Chase noted that worldwide
"there have never been back to back large cocoa crops as typically a strong
production increase is followed by a natural setback as the trees rest.
Next season "would be a game changer if production continued
strong after a massive jump in output in 2016-17".
however, for December eased by 0.6% to 67.27 cents a pound, after the USDA's
Wasde briefing issued a more generous estimate for US supplies of the fibre in
2017-18 than had been expected.
While the USDA did cut its forecast for domestic cotton
output by 200,000 bales to 19.0m bales, reflecting a weaker-than-expected
sowings figure released two weeks ago, traders had expected a bigger downgrade,
to 18.9m bales.
The estimate for the US cotton yield was nudged higher by 6 pounds
per acre to 816 pounds per acre.
Meanwhile, US stocks at the close of 2017-18 were pegged at 5.3m
bales, a downgrade of 200,000 bales, but ahead of the 5.10m-bale figure
investors had expected.
The figures were "slightly bearish" for cotton prices, Rabobank