Financial markets were initially skeptical of yesterday's announcement by the US Federal Reserve of its new strategy, then they rebounded. Thus, after two years of studies and debates, the Fed has chosen to be more flexible on inflation in order to be able to focus on employment. Its new strategy augurs well for prolonged maintenance of near-zero interest rates in the United States and increased tolerance for inflation above 2%. The first skepticism of the markets can be explained, according to Jack Janasiewicz, portfolio manager at Natixis Investment Managers . “No new specific tools have been announced, leaving open the debate over monetary policy constraints as we approach the zero floor,” Reuters reports. "The Fed can continue to try to do everything on its side, but we have to hand over to the fiscal side to stimulate growth."

The campaign for the American presidential election in November is in the background, Donald Trump having formally accepted his nomination as the candidate of the Republican Party yesterday against his Democratic rival Joe Biden.

In the currency market, the dollar initially nosedived in response to Fed announcements but then erased its losses to close with the euro at $1.1820. The pound touched an eight-month high against the dollar at £1.3283 before closing at £1.3170.

The oil market is in sharp decline after the passage of hurricane Laura on Texas and Louisiana, which shut down almost all refining capacity in this region. Brent crude finished at $45.20 a barrel and US light crude (WTI) at $43.09.

COCOA

Over the period usually under review in its chronicles, i.e. from the close last Friday to yesterday evening, cocoa rose sharply, from $2,409 to $2,539 per tonne in New York and from £1,659 to £1,720 in London. Among other factors, the market is worried about the dry weather which could affect the upcoming harvest in Côte d'Ivoire.

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Ivory Coast where the 2019/20 campaign will begin its last month. Arrivals at the two ports totaled 2.03 million tonnes (Mt) between October 1 and August 23, down 6.7% over the same period last season. However, bean exports from October to June increased slightly, by 0.2%, compared to the same period last season, to 1.426 Mt, according to provisional port data published in mid-August. Local grindings increased by 2.6% over the campaign at the end of July, to 469,000 t against 457,000 t over the same period in 2018/19, the No. 1 in cocoa vying with the Netherlands for the top of the podium transformers. In July alone, volumes were 47,000 t compared to 48,000 t in July 2019. It should be remembered that its total installed processing capacity in Côte d'Ivoire is 712,000 t.

On the other hand, the world n°1 in beans sold more than 1.3 Mt of cocoa export contracts for the 2020/21 campaign against 1.6 Mt usually. These contracts were sold at a price that includes the Decent Income Differential (DRD) of $400. of this next campaign (read our information: Launch of the Côte d'Ivoire-Ghana Cocoa Initiative).

In Nigeria, the world's fifth-largest producer, cocoa production could fall by at least 20% this season as measures to curb the spread of Covid-19 and drier weather increase the chances of a poor harvest, the report said. Reuters the chairman of the Cocoa Association of Nigeria, Mufutau Abolarinwa. 2019/20 production would be only 250,000 tonnes, less than the International Cocoa Organization's forecast of 260,000 tonnes (read our news: Nigeria cocoa production drops by at least 20% in 2020 /21)

On the business side, the Russian agency Tass, whose federal anti-monopoly service accuses Lindt & Sprungli of making a difference in the quality of the chocolate it sells on the Western European and Russian markets. The Swiss responded on Tuesday by specifying that in its factories, there was no differentiation of manufacture according to the destination of the chocolate, arguing an independent audit carried out at its request.

COFFEE

If the price of Robusta coffee ended yesterday evening almost where it was last Friday, ie at $1,405 per ton against $1,406, it was not for all that less volatile. Indeed, on Wednesday it climbed to an eight-month high of $1,448. Arabica, listed in New York, rose for its part from $1.198 per pound (lb) to $1.2235 yesterday evening.

Among the bullish factors, we note that certified stocks, i.e. those held by commodity exchanges, fell to 1.32 million bags (Ms) as of April 24 against 2.36 Ms a year ago. a year. Added to this is the firmness of the Brazilian real, which usually leads this country to sell less internationally because its coffee is less competitive. However, the Brazilian volumes remain impressive this campaign: as of August 10, producers had sold 51% of their harvest against 37% on average over the past five years. We are heading towards a record harvest that some estimate to reach 68 Ms.

As for Robusta, we are still on the wave of sustained global consumption at home, where more Arabica-Robusta blends are usually consumed than in drinking establishments that serve Arabica instead.

In Vietnam, prices reached their highest level of the year on Thursday, following the strong surge on the London futures market but also in the face of the low volumes available in the country at the end of the 2019/20 campaign: 25 August, coffee stocks were at 109,080 t against 150,000 t a year ago. In the Central Highlands coffee belt, farmers were offered 34,000-34,500 dong ($1.47-1.49) for their kilo of coffee, something not seen since August 2019. That said, the new 2020/21 crop is looking good with steady rains and cherries looking as big as last year, according to a trader on site, but some are anticipating a slight drop in volumes. On the export side, Vietnamese traders offered Grade 2, 5% black grains and broken grains, with a premium of $80 on the November deadline in London against $80 to $90 last week.

In Indonesia, prices have fallen a little because the supply is abundant; the harvest could last until the end of October, said a trader interviewed by Reuters. That said, demand from local roasters is strong, competing with exports. The premium was around $140-$200 on November versus $160-$210 last week.

In Uganda, exports jumped 17.2% in July from a year ago, shipping 543,251 60-kilo bags. This is the highest monthly volume since 1991. Two main reasons for this, according to the Uganda Coffee Development Authority (UCDA): new orchards coming into production and the end of restrictions linked to the fight against the coronavirus.

On the business side, at the giant Starbucks , since last Tuesday, customers in stores in the United States find a bar code in their bag which allows them to know where the beans of the coffee they drink come from, where they were roasted. as well as some small barista recipes. Even more interesting, a reverse code allows the producer to trace his product to the consumer. This new tool was developed by Microsoft and uses blockchain technology. Starbucks recalls on this occasion that for more than ten years it has been working to trace its products (read our information of this day).

On the other hand, the American roaster JM Smucker , owner of brands such as Folgers and Dunkin' Donuts, announced on Tuesday a 23% increase in its retail sales in the United States during its financial quarter at the end of July.

Brazilian coffee exporter Comexim has appointed former ETG (Export Trading Company) executive Alex Park to lead its new European office based in Geneva.

Finally, from DR Congo, Nespresso has just launched a range of organic coffees called Kahawa Ya Congo as part of its Les Origines Revivées program.

RUBBER

The rubber market soared to a six-month high to reach yesterday on the Osaka Stock Exchange (OSE) 184.3 yen ($1.74) per kilo against 173.3 yen last Friday. Prices are supported by higher demand from China (see below the recovery of the automotive market), a certain optimism on the Sino-American trade agreement with the commitment to respect the phase 1 agreement but also concerns about tight supply from Thailand due to a labor shortage following the Covid-19 pandemic. Compared to the end of July, prices rose by nearly 20 yen (164.8 yen). On the Shanghai market, however, the recovery is less clear with a closing yesterday at 12,615 yuan ($1834) per ton against 12,380 yuan last Friday and 10,885 yuan at the end of July.

The Association of Natural Rubber Producing Countries (ANPRC) in its latest note is quite optimistic on the natural rubber market. Indeed, it estimates that world rubber consumption should once again enter positive territory following stimulus policies and improved economic activity in China, the States and other major consumer countries. Thus, consumption should grow by 2.6% over the three months from August to October after having fallen by 15% in the first half and by 2.7% in July. The ANPRC observes that the prices of natural rubber, with the exception of latex, are on a recovery trajectory in July. “Despite growing concerns about a possible second wave of the pandemic and deteriorating diplomatic relations between the United States and China, natural rubber prices have the potential to continue on a path of marginal recovery, in the short term. term, supported by a multitude of factors, including a marginal improvement in global consumption, factors limiting global production and physical availability of rubber, lower inventories held in designated warehouses at the Shanghai Stock Exchange, expected continued weakness of the US dollar and the support of the crude oil market” indicates the ANPRC.

Ivory Coast exported 475,077 tons of natural rubber in the first six months of 2020, registering a jump of almost 27% compared to the same period in 2019 (374,048 tons), according to provisional data from the port. Wednesday.

In Malaysia, exports of natural rubber increased by 14.2% in June 2020 to 38,587 tons from 33,780 tons in May 2020, according to the Department of Statistics Malaysia (DOSM). The main export destination was China (68.1%), followed by Finland (4.2%), Germany (3.8%), the United States (2.9%) and Taiwan (2.7%). "Rubber gloves are still the main export product, with the export value increasing by 30.7%, from 2.13 billion in May to 2.78 billion Malaysian ringgit ($667 million) in June," says Chief Statistician Datuk Seri Dr Mohd Uzir Mahidin in a statement. Clarifying that the rubber glove industry accounted for 34,358 tonnes or 77.7% of total domestic consumption. Overall, domestic natural rubber consumption rose 8.7 percent in June to 44,217 tons from the previous month. As for rubber production, it jumped 59.3% in June to 33,531 tons, against 21,044 tons the previous month. However, production decreased by 8.9% in June compared to the same month of the previous year. Finally, stocks decreased by 12.6% to 254,105 tons from 290,607 tons in May 2020. Mohd Uzir said the average latex concentrate price improved to 479.90 sen per kg in June from 432 .16 sen per kg in May, while the price of Standard Malaysian Rubber 20 (SMR 20) rose to 484.33 sen per kg from 470.13 sen per kg. .

In China, the recovery in car sales is confirmed after the trough reached following the Covid-19 pandemic. Sales soared 16.7% in July, up for the fourth consecutive month, to 2.11 million vehicles according to statistics from the China Association of Automobile Manufacturers (CAAM). The level of sales over the first seven months of 2020 is however 12.7% lower than that reached over the same period in 2019. The association expects auto sales to fall by around 10% this year, unless a second wave of infections occurs, then the decline could be around 20%. A promising sign for many global automakers that have invested heavily in electric vehicles for the Chinese market, sales of new energy vehicles (NEVs) ended 12 straight months of decline with a 19.3% jump to 98 000 units. CAAM estimates that NEV sales should reach 1.1 million vehicles this year, down about 11% from last year. Sales of trucks and other commercial vehicles, which make up around a quarter of the market, jumped 59.4%, driven by government investment in infrastructure as well as stricter emissions rules introduced this year. Sales of passenger vehicles increased by 8.5%.

In the United States, the US Treasury determined that Vietnam's currency was undervalued in 2019 by 4.7% against the dollar in part due to government intervention, according to a new assessment sent to the US Department of Finance. Trade . The assessment was conducted in the context of an anti-subsidy investigation into imports of tires for light vehicles from Vietnam. Vietnam's trade surplus with the United States widened to $30.88 billion in the first seven months of this year, from $24.82 billion in the same period last year, Vietnam Customs data shows. .

COTTON

Cotton lint prices remain extremely strong, at their highest for 6 months, above 65 cents per pound, while record world stocks are expected in 2019/20 and 2020/21 and a drop in world cotton consumption. The potential damage caused by tropical storms Laura and Marco which hit the Gulf of Mexico but also the renewed optimism regarding the commercial relationship between the United States and China with a reaffirmation on both sides of a respect of the Phase 1 deal supported fiber which closed yesterday in New York at 65.37 cents per pound, up slightly from last Friday (64.28 cents) as well as from the end of July (62, 66 cents).

Evolution of cotton prices

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Source: ICE

In these latest projections, Cotlook expects global cotton stocks to rise by more than one million tonnes at the end of 2020/21 with production of 24.616 million tonnes (Mt), up 219,000 tonnes. following significant increases in India and the United States, and consumption unchanged at 23.539 Mt. consumption reduced to 21.976 Mt.

Organic cotton production in 2018/19 increased by 31% to 239,787 tons approaching the record level reached in 2009/10 (242,722 tons), according to the latest report from Textile Exchange, which estimates that it should grow by 10% in 2019/20 (Read: Sharp rebound in world organic cotton production).

In Côte d'Ivoire, cotton production recorded a new record in 2019/20 at 490,423 tonnes, allowing the country to maintain its position as the third largest African cotton producer, behind Benin and Mali. For the 2020/21 campaign, the producer price was maintained at the high level of FCFA 300 per kilo (Read: Côte d'Ivoire's enthusiasm for cotton is confirmed). On the other hand, the impact of the coronavirus is felt at the level of exports in the 1st half of 2020 with a drop of 45% compared to the same period in 2019 to 131,057 tonnes, according to provisional data from the port. These statistics also include cotton from Burkina Faso and Mali.

In India, India's annual cotton exports in the 2019/20 season (October-September) are expected to increase by 19% to 5 million bales (170 kilos) as estimated by the Cotton Association of India ( CAI) . This represents an increase of 800,000 bales compared to 2018/19. The CAI has also revised Indian cotton production upwards to 35.450 million bales while domestic consumption is lowered to 25 million bales.

In Vietnam, cotton imports fell by 9.1% in July to 121,100 tonnes compared to July 2019. However, there was a slight increase, plus 2.6%, compared to June. From January to July 2020, imports amounted to 899,900 tons, down 4.5% compared to the same period in 2019.

PALM OIL

The palm oil market was volatile this week, finishing more or less at the same level at 2,680 ringgits ($642.69) per tonne yesterday against 2,678 ringgits last Friday, the same level as at the end of July. Since June, crude palm oil prices have risen by around 16% thanks to the recovery in demand, as containment measures have eased in many countries. “Resupply in China and India has been the main driver of good crude palm oil prices, but we expect fourth quarter demand to slow down a bit,” said Haris Fadzilah Hassan, managing director of Malaysian FGV Group. , during a press conference. He expects palm oil prices to fall in the second half with a drop in demand in the fourth quarter. The world's largest producer of crude palm oil estimated that crude palm oil prices will trade between 2,400 and 2,600 ringgit per ton.

Already, the fall in demand is perceptible in August with Malaysian exports down between 14% and 16% according to the inspectors over the period from 1 to 25 August.

India's July palm oil imports rose 1.4% from a year earlier to a 10-month high of 824,078 tonnes as the Covid-19 lockdown gradually eased. having increased demand in hotels and restaurants, according to the Solvent Extractors' Association of India (SEA). The country's soybean oil imports in July jumped 52 percent from a year ago to 484,525 tons, while sunflower oil imports rose 4 percent to 208,747 tons. Overall, edible oil imports rose 13% in July to 1.52 million tonnes, an 11-month high, according to the SEA. Edible oil inventories had fallen significantly due to lower imports from March to May, prompting refiners to increase imports in July, said BV Mehta, executive director of SEA.

Also in India, soybean production could rise by 32% in 2020 to 12.25 million tonnes due to the increase in oilseed area and the fact that yields are expected to increase with the abundant monsoon rains, according to the Soybean Processors Association of India. An increase that could reduce the country's vegetable oil imports.

In Indonesia, palm oil exports and production fell in the first half due to drier weather and lower demand caused by the coronavirus pandemic, according to a statement by the president of the Indonesian Palm Oil Association (GAPKI) Joko Supriyono. Production in Indonesia, the world's largest producer of palm oil, fell 8.9% to 23.5 million tonnes (Mt) for the January-June period. "I think the main factor is the dry weather last year and the consequences of 2018, when prices were very low," said Joko Supriyono.

According to GAPKI, palm oil exports in the first half fell to 15.5 Mt, down 11.7% from 17.55 Mt in the first half of 2019. "70% of our palm oil is exported and almost all export destination countries have experienced a contraction in demand due to the lockdown," said Joko Supriyono. Adding "The main markets of Europe, India, China ... have seen a very significant decline".

In Malaysia, Malaysian palm oil stocks fell to their lowest level in three years in July as production fell due to labor shortages and heavy rains, while exports rose. increased amid easing coronavirus curbs, according to data from the Malaysian Palm Oil Board (MPOB). End-of-July stocks fell 10.55% from the previous month to 1.7 Mt, while production fell 4.14% to 1.81 Mt. As for palm oil exports, it rose 4.19% m/m to 1.78 Mt, marking the fifth consecutive monthly gain.

Britain said on Monday it would launch a consultation process on a potential new law that would force big companies to clean up their supply chains – cocoa, rubber, soy, palm oil – by fining them if they used products grown on illegally deforested land (Read: Britain working on supply chains linked to deforestation).

On the business side, Malaysia's Sime Darby Plantation posted a sharp rise in net profit in the second quarter as higher palm oil prices mitigated the impact of the Covid-19 pandemic. Net profit was 378 million ringgit ($90.67 million) for the April-June period, compared to 27 million ringgit in the year-ago quarter. Revenue rose 12% to RM3.22 billion. “We expect demand to improve in the second half of this year as countries ease lockdown restrictions allowing businesses to replenish stocks,” said group chief executive Mohamad Helmy Othman Basha. He also added that the company was exploring all available avenues to alleviate a labor shortage due to the coronavirus. Following Covid-19 and travel restrictions, the plantations are facing a labor shortage of around 37,000 people, or almost 10% of the total workforce. Malaysia's FGV Holdings Bhd also saw its profit grow in the second quarter to 20.5 million ringgit, against a net loss of 52.2 million ringgit last year. An increase following the increase in palm oil prices and the reduction of losses in the sugar sector. Revenue rose slightly to RM3.29 billion from RM3.28 billion last year. “However, the overall performance was affected by the coronavirus pandemic which continues to spread around the world,” said Haris Fadzilah.

RICE

Indian rice export prices rose for a third consecutive week, while concerns over poor rainfall supported Thai prices.

In India, 5% parboiled rice prices climbed to $384-$390 a tonne from $383-$389 last week as flooding also reduced rice milling with monsoon rains likely to remain heavy for the rest of the month. . Until last week, plantings of rice, the main summer crop, amounted to 37.8 million hectares, compared to 33.9 million hectares in the same period last year.

In Thailand, Thai 5% prices rose to $500-$520 per tonne from $480-$500 last week. Erratic rainfall in some rice-growing provinces of Thailand has fueled fears of lower yields in 2020/21, with traders also warning of a disappointing off-season harvest.

In Vietnam, Viet 5% prices remained unchanged for a second consecutive week at $480-$490 per ton. Traders expect prices to remain high over the coming weeks amid increased demand from China, which has also suffered from flooding. Exporters cannot sign new export contracts due to the scarcity of domestic supplies and are instead focusing on fulfilling contracts signed with Malaysia, the Philippines and Cuba, a Ho Chi Minh-based trader said. Town.

In China, rice production should, after 7 consecutive years of decline, increase by 3.9% in 2020 to 27.29 million tonnes, according to the National Bureau of Statistics (NBS). The rise was mainly due to an increase in cultivation areas, although severe flooding in parts of southern China led to lower yield per unit area, said Li Suoqiang, an NBS official.

SUGAR

The price of sugar has fallen this past week. The pound (lb) of roux fell from 12.83 cents last Friday to 12.77 cents last night in New York, while in London the ton of white sugar slipped from $370.60 to $362.

The overall trend is unclear, say some traders polled by Reuters. Admittedly, Brazilian production is on the rise, but it is falling in major sugar players such as Thailand, the European Union or even Russia, and one wonders how high this compensates. According to Agritel, European and British production would fall by 7% to 15.98 Mt, with France showing the sharpest fall. Furthermore, it is rumored that China may take a break from buying as it was its intervention that pushed sugar to a five-month high.

In Brazil, sugar production increased by 51% in the first half of August compared to the beginning of August 2019, to 3.21 Mt, the industrial group Unica announced on Wednesday. Refineries have continued to favor sugar production over ethanol production from cane, as biofuel sales are down 18% from a year ago. Specifically, in the important Central South producing area, sugar production in the first half of August is expected to have climbed 53% to 3.249 Mt, according to a survey by S&P Golden Platts. If true, it would be an all-time high for an early August. Grindings would have reached 46.68 Mt, up 8.9% on last year.

In the United States, Hurricane Laura damaged cane fields in Louisiana as the harvest begins in mid-September. That said, the world market continues to be very well supplied, with the increase in production in Brazil not decelerating. The increase in production would be 50% this year.

In Egypt, the Sugar Council at the Ministry of Agriculture announced that the country's strategic sugar reserves are sufficient to cover demand for 6 months. During the 2020 campaign, the country produced 2.3 Mt of sugar, including 860,000 t from cane and 1.4 Mt from beet.

On the business side, Britain's Czarnikow will develop its business in the Brazilian ethanol and energy markets. She will create a new company named CzEnergy. Remember that ethanol represents nearly 40% of the energy consumed by light vehicles in Brazil, the second largest market in the world behind the United States in biofuels.