Bullish Technical Action in Cocoa
Cocoa prices have quickly regained upside momentum following a 1-day pullback as they continue to find support from bullish supply/demand news. From the supply side, a group of pod counters told Reuters that they were revising their forecast for Ghana’s 2021/22 cocoa production from 900,000 all the way down to 675,000 tonnes, which would be an over 35% decline from their output last season and would be their lowest full-season production total since the 2009/10 season.
While the coffee market has been moving higher since the first session of January, it continues to see back-and-fill price action and an inability to sustain upside momentum. With improving demand and bullish supply developments in Brazil and Colombia, coffee should remain well supported on near-term pullbacks. The Brazilian currency rallied to an 8-week high, which provided the coffee market with carryover support as that should ease pressure on Brazilian farmers to market their remaining near-term coffee supplies.
March cotton closed moderately lower yesterday despite a supportive export sales report. It also followed a bullish supply/demand report on Wednesday. The market spent Thursday inside Wednesday’s range and appeared to be consolidating the gains in made in response to the supply/demand report, which showed surprising declines in US and world ending stocks for 2021/22.
While key outside markets continue to have volatile price action, sugar has bullish supply factors to help support. Larger than expected early-season sugar production in Thailand put additional pressure on sugar prices as most of their increased output will head out into the global export marketplace.
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