The EIA data also showed that domestic production rose 78,000 barrels a day to 8.428 million last week, up 1.103 million barrels on a year ago and the highest since October 1986. Amid the surge in domestic output as a result of shale oil plays, the U.S. is now in the process of evaluating its ban on crude oil exports, according to news sources quoting U.S. Energy Secretary Ernest Moniz this week.
Moniz has hinted at studying crude oil exports before, but his comments on May 13 were seen as the strongest yet.
Arabica extends losses, cocoa edges up
Among soft commodities, arabica coffee continued to trend lower but cocoa edged up from the three-month lows hit last week. The benchmark July cocoa contract on New York’s ICE Futures U.S. exchange settled at $2,892.50 a tonne at midweek after touching $2,849 a tonne on May 8, the lowest for the second-position since late January. On London’s NYSE Liffe exchange, cocoa for the delivery in the same month settled at £1,813 a tonne on May 14. Liffe July cocoa had sunk to £1,771 on May 8, the weakest for a second-position since late January.
An improved supply outlook in West Africa, where the mid-crop harvests are underway is leading to some easing of deficit concerns by some market watchers. Plentiful rain has led analysts to raise cocoa output forecasts for the region and particularly for top producer and exporter Cộte d’Ivoire.
Marex Spectron, a leading privately owned broker of financial products in the commodities sector, is among those to have cut their forecasts of the 2013-2104 global cocoa deficit estimate. Last week, the firm cuts its global supply deficit estimate to 40,000 tonnes from the 134,000 tonnes estimate made last September.
However, the increasing risk of an El Niño weather event as early as July is limiting the downside price fall potential. El Niño often leads to disproportionate dryness in West Africa.
Expectations of a sizeable global supply deficit had led cocoa futures prices to rally to reach more than 2⅟2 year highs in March. The second-month contracts on ICE and Liffe had reached peaks of around $3,027 and £1,888 a tonne respectively.
Sugar rallies on Brazilian output dip
Raw sugar reversed the recent downtrend which saw the benchmark July contract on ICE Futures U.S. exchange touch a two-week low of 17.08 cents a pound on May 8. On May 14, the second-month contract settled at 18.26 cents a pound, up 1.09 cents on where it started the week. Earlier in the day, July raw sugar had touched 18.28 cents, its strongest level since March 28.
White, or refined, sugar also rallied on London’s NYSE Liffe exchange, with the August contract climbing to a 6⅟2 month highs on May 14, finishing at $494.50 a tonne.
The rally followed Brazil’s sugar cane industry association, Unica’s reported lower sugar output in the country’s Center-South, the country’s main cane-growing area, for the 2014-2015 sugar year to April 30. Production fell 13.3 percent to 1.475 million tonnes from 1.70 million tonnes over the same year-earlier period, the Unica data showed.
The London-based International Sugar Organization (ISO) sees sugar production in Brazil’s Center-South dropping from 34.3 million tonnes in 2013-2014 (Oct. 1-Sept 30) to 33.4 million tonnes in 2014-2015, according to its latest Quarterly Market Outlook, released May 13. For Brazil as a whole, the industry body forecasts production to fall from 37.5 million tonnes to 37 million tonnes. In addition to the impact of drought on the Center-South output, processing capacity is reducing due to a number of sugar mills closing in the region.
Worries about the El Niño weather risk are helping provide some support to prices. But price gain potential is being capped by expectations of a further build in what are already more than ample global stocks by the end of the current crop year despite the uncertainties over the Brazilian crop due to drought damage.
