Softs this morning are mixed with Jul sugar -0.03 (-0.24%), Jul coffee +0.35 (+0.30%), Jul cocoa +27 (+1.13%) and Jul cotton +0.30 (+0.32%). Softs on Wednesday settled mixed: Jul sugar +0.16 (+1.30%), Jul coffee -1.00 (-0.85%), Jul cocoa -33 (-1.37%), Jul cotton -1.40 (-1.47%). Jul sugar on Wednesday closed higher as a rally in in crude oil prices to a 1-week high was positive for ethanol prices and may prompt Brazil's sugar producers to divert more sugar supplies toward ethanol production. Jul sugar on Monday rose to a 1-week high as a rally in the Brazilian real to a 2-week high against the dollar fueled fund short covering in sugar. Jul sugar last Friday sold-off to a 3-week low after the Brazilian real plunged to a 2-1/4 year low against the dollar, which spurred fund selling in sugar on concern the weaker real will spur Brazil's sugar producers to increase more-profitable sugar exports. Unica reported Brazil's Center-South 2018/19 sugar output through May was 5.49 MMT, down -3.93% y/y, with the amount of sugar converted to ethanol at 6.555 mln liters, up +51.88% y/y. Sugar prices posted a 2-1/2 year nearest-futures low in late-Apr on the prospects for abundant global supplies. The Thailand Office of Cane and Sugar Board reported Thailand 2017/18 sugar production rose to a record 14.47 MMT, while the ISO raised its global 2017/18 sugar surplus estimate to +11.1 MMT from a Mar estimate of +5.15 MMT and projected a global 2018/19 sugar surplus in excess of 4 MMT. Researcher Green Pool raised its global 2017/18 sugar surplus to an all-time high of 18.4 MMT and forecast a global 2018/19 sugar surplus of 6.6 MMT. Also, India's SMA boosted its estimate for India's 2017/18 sugar production to a record 31.5 MMT from a Mar forecast of 29.5 MMT, although India's sugar exports may be limited after the government approved a plan to establish domestic sugar stockpiles of 3 MMT. 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. On the positive side, Conab projects Brazil 2018/19 sugar production will fall -6.3% y/y to 35.5 MMT, a 3-year low.

Jul coffee on Wednesday closed lower on abundant supplies after ICE-monitored coffee inventories rose to a 2-1/2 year high of 2.044 mln bags on Tuesday. Jul coffee last Friday fell to a 3-week nearest-futures low on concern Brazil's coffee producers may boost more-profitable coffee exports after the Brazilian real slumped to a 2-1/4 year low against the dollar on Thursday. Coffee prices posted a contract low and 2-1/4 year nearest-futures low (K18) last month as the outlook for robust coffee supplies fueled fund selling of coffee futures. Conab projects Brazil 2018 coffee production of 58 mln bags, up +29% y/y, as crops are in the higher-yielding half of their biennial cycle. Researcher Olam forecasts a global 2018/19 arabica coffee bean surplus of +6.1 mln bags following a -4.1 mln bag deficit in 2017/18. Also, Columbia, the world's second-largest arabica producer, reported its Apr coffee exports rose +3% y/y to 920,922 bags, and Vietnam said it expects its 2018 coffee exports to rise +9% y/y to 1.55 MMT. ICO projects global 2017/18 coffee production will climb +0.8% y/y to a record 158.93 mln bags. On the positive side, the USDA projects that global 2017/18 coffee ending stocks will fall -8.6% to a 5-year low of 29.3 mln bags, and U.S. Apr green coffee inventories fell -2.3% y/y to 6.733 mln bags. ICO reported global coffee exports from Oct-Apr were 70.65 mln bags, up +1.2% y/y.

Jul cocoa prices on Wednesday fell back from a 1-week high and closed lower on the outlook for adequate global supplies. Jul cocoa had posted that 1-week high as signs of tighter supplies boosted fund short-covering after Ivory Coast farmers delivered 1.739 MMT of cocoa beans to Ivory Coast ports during Oct 1-Jun 10, down -2.0% y/y. Cocoa prices have trended lower over the past month to a 3-1/4 month nearest-futures low last Thursday as weather concerns eased in West Africa, which prompted fund selling of cocoa futures. Forecasts now call for normal to above-normal rainfall in the Ivory Coast over the next month. Cocoa prices rallied to a 1-1/2 year high in late-Apr on signs of stronger global demand along with concern excessive dry conditions in West Africa would reduce Ivory Coast and Ghana cocoa yields. Cocoa purchases from the Cocoa Bard of Ghana, the world's second-biggest cocoa producer, have fallen -8.4% y/y to 722,182 MT from Oct 13-May 10. European Q1 cocoa processing rose +5.5% to 358,432 MT, more than expectations of +3.4% and the most for a Q1 in data going back to 2001, and Asian Q1 cocoa processing rose +7.2% y/y to 190,244 MT, stronger than expectations of +6.2% y/y. ICCO projects that 2017/18 global cocoa production will fall -3.4% y/y to 4.587 MMT and that the global cocoa surplus will fall to +10,000 MT from 2016/17's 6-year high surplus of 300,000 MT. On the negative side, the recent rally in cocoa prices may be crimping global demand after Barry Callebaut, the world's top cocoa processor, reported recently that global chocolate sales rose +2.0% y/y in the three months through Jan, the slowest pace of increase in a year. Also, the National Confectioners Association reported Apr 20 that Q1 North American cocoa processing unexpectedly fell -1.1% y/y to 120.152 MT, weaker than expectations of a +1.5% y/y increase.

Jul cotton on Wednesday closed lower after the India Cotton Association raised its India 2017/18 export forecast to 7 mln bales, up +11% y/y. Cotton prices have rallied sharply over the past month on U.S. crop concerns and on Monday posted a 4-1/4 year nearest-futures high. Also, Tuesday's WASDE report was supportive after the USDA cut its U.S. 2018/19 cotton ending stocks estimate to 4.7 mln bales, below expectations of 4.8 mln bales, and cut its global 208/19 cotton ending stocks estimate to 83.0 mln bales, less than expectations of 83.1 mln bales. Drought conditions have worsened in Texas, the largest cotton-growing state, after U.S. Drought Monitor data on Thursday showed 32% of Texas was in a severe-to-extreme drought as of Jun 5, up +1 pt w/w. Also, stronger foreign demand for U.S. cotton is supportive as U.S. Apr cotton exports rose +34% y/y to 479 MT. The China National Cotton Information Center forecasts China 2018/19 cotton imports will surge +66.5% y/y to 2.06 MMT. Chinese cotton demand has been weak due to trade tensions with China Jan-Apr cotton imports down -6.7% y/y at 450,000 MT. Cotton prices on Apr 4 plunged to a 3-3/4 month low on the Chinese proposal to slap 25% tariffs on U.S. cotton exports. A negative is increased cotton output in India, the world's second largest cotton producer, as India projects its 2017/18 cotton production will climb +9.8% y/y to a 3-year high of 37 mln bales. Cotton demand is a major supportive factor as the USDA projects that global 2018/19 cotton use will climb to a record high of 125.35 mln bales. Monday’s USDA Crop Progress report showed 42% of the U.S. cotton crop in good-to-excellent condition as of Jun 10, up +1 point w/w but -24 points behind last year at the same time.