Continuous bearish trend in the soft commodities markets

COCOA futures increased 2.3 per cent and settled at US$ 1,910 per tonne last week, underpinned by short- covering on a positive technical view and possible increasing demand. However, it decreased by 7.71 per cent over the month, and it is expected to continue its bearish trend.

Ghana Cocoa Board (Cocobod) announced that Ghana missed out on about US$ 1 billion in cocoa export earnings.

In its February, while the International Cocoa Organisation ( ICCO) forecast that world production would increase about 15 per cent to 4.55 million tonnes, with grindings to also rise by around three per cent to 4.24 million tonnes, in its February market view.

Besides, the local farmers mentioned that weather appeared to improve in the Ivory Coast with a mix of healthy rainfall and sunny spells last week, boosting the prospects for a strong start to the upcoming main crop.

Arabica Coffee futures were up 3.72 per cent and settled at US$ 133.7 per tonne last week. It hit a six- a-half-week high early of July as a stronger currency and signs of tighter supplies in Brazil prompted the short covering, although speculators had been in the shorting positions.

The Brazilian real rose against the dollar due to the reduction of exporters’ incentive to sell greenback-traded commodities in the top producer.

Furthermore, Brazil’s farmer had harvested slightly less of this season’s crop last week, versus the same period last year amid persistent rains and a labour shortage.

Overall, ICE Arabica Coffee appreciated by 4.66 per cent last month. However, the large net short position in the current market might pressure the price to fall.

Sugar futures increased marginally by 1.06 per cent and settled at US$ 14.3 cents per lb. It gained ahead of expiry on July 14, as well as tighter nearby deliverable supplies and stronger Brazilian Real in previous week.

Bi-weekly cane industry data from Brazil showed millers increased sugar output, its production is expected to be higher by 25 per cent in 2017 to 2018.

Sugar may trade sideways on sufficient supplies in the domestic market. In general, ICE raw sugar futures increased by 3.25 per cent over the month.

Cotton futures traded lower by 2.93 per cent and settled at US$ 0.6658 per lb last week, on slower US weekly export sales and shipments, weak technical actions and sharp losses in grain weighed collectively on cotton.

US Department of Agriculture’s latest monthly report increased more than forecast production to 1.28 million bales, an increase of 11.8 per cent.

Cotton will likely trade slightly downwards on higher acreage and sufficient stocks, but it might be supported by good physical demand and dry weather. Overall, ICE cotton futures decreased by 6.16 per cent last month.