Softs this morning are mixed with Oct sugar -0.14 (-1.24%), Sep coffee -0.30 (-0.27%), Sep cocoa -2 (-0.08%) and Dec cotton +1.05 (+1.24%). Softs on Wednesday closed lower: Oct sugar -0.12 (-1.05%), Sep coffee -2.75 (-2.40%), Sep cocoa -21 (-0.84%), Dec cotton -1.66 (-1.92%). Oct sugar on Wednesday closed lower as a stronger dollar weighed on prices. Oct sugar last Tuesday fell to a 1-1/2 month low on concern about an increase in global supplies after the Indian Sugar Mills Association asked the government to increased India's 2018/19 sugar export quotas to a record 6 MMT. Another negative was the decline in the Brazilian real to a 1-month low against the dollar Thursday, which gives incentive to Brazil's sugar producers to boost more-profitable sugar exports. On the positive side, Unica recently reported Brazil's Center-South 2018/19 sugar output through Jun was 9.747 MMT, down -12.1% y/y, with the amount of sugar converted to ethanol at 11.06 mln liters, up +45% 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 19.6 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. 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.

Sep coffee on Wednesday closed lower as a stronger dollar was negative for most commodities. Sep coffee last Friday posted a new contract low and nearest-futures (N18) plunged to a 4-1/2 year low. Coffee prices have trended sharply lower over the past month on the prospects for robust supplies. ICE-monitored coffee inventories rose to a 2-3/4 year high of 2.065 mln bags last Tuesday and 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, coffee production from Columbia, the second-largest arabica-bean producer, rose +3.6% y/y in Jun to 1.087 mln bags. In addition, the Brazilian real fell to a 1-month low against the dollar Thursday, which gives incentive to Brazil's coffee producers to boost more-profitable coffee exports with the weak real. 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 Sucden forecasts a global 2018/19 coffee bean surplus of +6.6 mln bags. In addition, Vietnam said it expects its 2018 coffee exports to rise +9% y/y to 1.55 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. May green coffee inventories fell -3.5% y/y to 6.8683 mln bags. In addition, the ICO raised its global 2017/18 coffee deficit estimate to -1.4 mln bags from a previous estimate of -254,000 bags. ICO also reported global coffee exports from Oct-Apr were 70.65 mln bags, up +1.2% y/y.

Sep cocoa prices on Wednesday closed lower as a stronger dollar fueled long liquidation of most commodities. Sep cocoa on Friday fell to a 1-week low on forecasts for beneficial rains in West Africa over the next seven days, which should benefit cocoa crops in the Ivory Coast and Ghana, the world's two-largest cocoa producers. Purchases from the Cocoa Bard of Ghana, the world's second-biggest cocoa producer, fell by -8.5% y/y to 795,510 MT during Oct 13-Jun 7, although Ivory Coast farmers delivered 1.851 MMT of cocoa beans to Ivory Coast ports during Oct 1-Jul 8, up +0.3% y/y. Cocoa prices posted a 3-1/2 month nearest-futures low (N18) last month as weather concerns eased in West Africa. Cocoa prices rallied to a 1-3/4 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. 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.

Dec cotton on Wednesday closed lower on concern an escalation of trade tensions between the U.S. and China will curb China's demand for U.S. cotton supplies after the U.S. proposed tariffs on an additional $200 billion of Chinese products. Sep cotton on Tuesday rallied to a 2-week high on U.S. cotton crop concerns after World Weather forecast below-normal rainfall for West Texas over the next two weeks. Also, Monday’s USDA Crop Progress report showed that 41% of the U.S. cotton crop was in good-to-excellent condition as of Ju1 8, down -2 points w/w and well behind the 61% from the same time last year. Dec cotton on Thursday fell to a 1-1/2 month low on concern Chinese demand for U.S. cotton will decline after the U.S. went ahead with the implementation of $34 billion of tariffs on Chinese goods Friday. Also, the ICAC raised its global 2018/19 cotton production estimate to 25.94 MMT from a Jun estimate of 25.75 MMT due to a bigger cotton crop in Brazil. The Jun 29 USDA U.S. cotton acreage estimate was supportive as the USDA estimated 13.52 mln acres of U.S cotton planted this year, below expectations of 13.73 mln acres. U.S. Drought Monitor data showed that 25% of Texas was in a severe-to-extreme drought as of Jul 3, up +2 points w/w, but down from 36% 3-months ago. Another negative factor was the recent plunge in the Indian rupee to a record low against the dollar, which may boost Indian cotton exports at the expense of U.S. exports as the record low rupee lowers the price of India's cotton to foreign buyers. Cotton prices last month posted a 4-1/3 year nearest futures high (N18) on U.S. crop concerns. Stronger foreign demand for U.S. cotton is supportive as U.S. Apr cotton exports rose +34% y/y to 479 MT. China Jan-May cotton imports are up +2.5% y/y at 580,000 MT. A negative factor 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.