Softs this morning are mixed: Oct sugar +0.12 (+1.13%), Dec coffee +0.30 (+0.31%), Dec cocoa +3 (+0.13%), and Dec cotton -0.76 (-0.93%). Softs on Monday settled mixed: Oct sugar -0.53 (-4.75%), Dec coffee -2.40 (-2.41%), Dec cocoa +17 (+0.77%), Dec cotton -0.52 (-0.64%). Oct sugar on Monday fell to a 1-week low on concern India may increase subsidies to its sugar farmers, which may boost India's sugar exports and add to global supplies. Oct sugar last Thursday climbed to a 2-1/2 month high after signs of weaker Brazil sugar production spurred fund short covering. Data from Unica showed Brazil's Center-South 2018/19 sugar output through Aug was down -19.3% y/y at 18.842 MMT, with the amount of sugar converted to ethanol at 20.495 mln liters, up +33.5% y/y. Also, Brazil Aug raw-sugar exports dropped -33% y/y to 1.44 MMT, the lowest for an Aug in 10-years. Oct sugar on Aug 22 slumped to a 10-year nearest-futures low as sugar prices have been hammered over the past 2 months on signs of abundant global sugar supplies. ISO forecasts global 2018/19 sugar production will rise +0.6% y/y to a record 185.2 MMT and projects a global 2018/19 sugar surplus of 6.75 MMT, down from surplus of +8.6 MMT in 2017/18. 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. The Indian Sugar Mills Association (SMA) projects 2018/19 sugar production in India, the world's second-largest sugar producer, will climb 10% to a record 35.5 MMT and the SMA also asked the government to increase India's 2018/19 sugar export quotas to a record 6 MMT. The Thailand Office of Cane and Sugar Board reported Thailand 2017/18 sugar production rose to a record 14.47 MMT. Conab forecasts Brazil 2018/19 sugar production will fall -9.6% y/y to 34.25 MMT, a 3-year low.

Dec coffee on Monday sold-off to a new contract low and nearest-futures (U18) slumped to a 12-year low on signs of robust supplies. Coffee prices have been hammered over the past 3-months on robust supplies as ICE-monitored coffee inventories continue to climb and posted a 3-1/3 year high of 2.308 mln bags on Friday. Also, weakness in the Brazilian real, which is just above the 2-3/4 year low against the dollar from Aug 30, is pressuring coffee prices as the weak real boosts the export incentive for Brazil's coffee producers. Cooxupe recently raised its Brazil 2018/10 arabica coffee crop estimate to 42 mln to 44 mln bags from a Feb estimate of 40 mln to 42 mln bags. Also, ICO data shows global coffee exports from Oct-Jun were 90.9 mln bags, up +0.3% y/y. 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, Vietnam coffee exports this year from Jan-Aug are up +16.5% y/y at 1.33 MMT. 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. 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. Jul green coffee inventories fell -7.8% y/y to 6.836 mln bags. In addition, ICO raised its global 2017/18 coffee deficit estimate to -3.5 mln bags from a previous estimate of -2.7 mln bags.

Dec cocoa prices on Monday closed higher on signs of tighter supplies as Ivory Coast farmers delivered 1.880 MMT of cocoa beans to Ivory Coast ports during Oct 1-Sep 16, down -5.01 y/y. Purchases of cocoa from the Cocoa Bard of Ghana, the world's second-biggest cocoa producer, fell by -4.8% y/y to 874,347 MT during Oct 13-Aug 30. Dec cocoa on Friday fell to a 3-week low as forecasts for ideal growing weather over the next week in West Africa spurred fund selling of cocoa futures. Nearest-futures (U18) cocoa on Aug 6 posted a 6-3/4 month low on signs of ample supplies amid mixed demand. Q2 North American cocoa processing data released Jul 20 showed an unexpected decline of -3.1% y/y to 119,301 MT, weaker than expectations for a +0.3% y/y gain. Demand concerns remain after Barry Callebaut, the world’s biggest cocoa processor, warned that high cocoa prices will curb global cocoa demand in Q3. Q2 Asia cocoa grindings rose +15.2% y/y to 185,394 MT, and European Q2 cocoa processing rose +7.3% to 356,109 MT, a Q2 record high in data going back to 2001. Current supplies have tightened as Nearest-futures (U18) 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. ICCO projects that 2017/18 global cocoa production will fall -2.0% y/y to 4.645 MMT and that the global cocoa surplus will fall to +31,000 MT from 2016/17's 6-year high surplus of 296,000 MT.

Dec cotton on Monday closed lower on concern the ongoing China/U.S. trade tensions will keep China from purchasing U.S. cotton. Cotton prices were already on the defensive from last Wednesday’s WASDE report where the USDA unexpectedly raised its U.S. 2018/19 cotton production estimate to 19.68 mln bales, more than expectations of a cut to 19.12 mln bales, and they unexpectedly raised their U.S. 2018/19 cotton ending stocks estimate to an 11-year high of 4.70 mln bales, more than expectations of a cut to 4.58 mln bales. The USDA also unexpectedly raised its global 2018/19 cotton production estimate to 121.97 mln bales, higher than expectations of a cut to 120.51 mln bales and raised its global 2018/19 cotton ending stocks estimate to 77.46 mln bales, more than expectations of 77,23 mln bales. Drought conditions improved in Texas after data from the U.S. Drought Monitor showed that 12% of Texas was in a severe-to-extreme drought as of Sep 11, a 21 point improvement from 33% last week. There is also concern about the Turkish financial crisis, which has dampened expectations for cotton demand from the third biggest buyer of U.S. cotton supplies. Increased cotton output in India, the world's second largest cotton producer, is another bearish factor for cotton prices as India projects its 2017/18 cotton production will climb +9.8% y/y to a 3-year high of 37 mln bales. China Jan-Jul cotton imports were up +12.2% y/y at 820,000 MT, although trade tensions between U.S. and China may limit China's demand for U.S. cotton going forward. The USDA projects that global 2018/19 cotton use will climb to a record high of 127.94 mln bales. Monday’s USDA Crop Progress report showed that 39% of the U.S. cotton crop was in good-to-excellent condition as of Sep 16, up +1 point w/w but well behind the 61% from the same time last year and the worst condition for this time of year since 2011. On the positive side, the International Cotton Advisory Committee predicted global 2018/19 cotton ending stocks may fall -9.8% y/y to 16.91 MMT, a 7-year low.