Cocoa Prices Higher
After being overshadowed during the past few months by global demand concerns, the supply side is starting to have a front and center status with the cocoa market. Even if global demand improvement is modest over the rest of this year, developing supply issues can help the cocoa market extend this recovery move.
Labor availability issues for the harvest in several major coffee-producing nations is helping to support the solid uptrend. While demand may be on the mend, relatively tight near-term supply may be a factor that continues through the third quarter. Positive sales guidance from major retailer Starbucks were an early source of strength for coffee market as points towards improvement in global demand.
The market drew some support this week from concerns over potential crop damage from this past weekend’s hurricane in Texas, from a new tropical storm heading towards the US Gulf and from a weaker dollar, but concerns about demand destruction due to the coronavirus still weighed on prices. Even though current crop progress reports do not show bolls opening, there were some news comments suggesting that excessive rainfall could pull cotton lint out of bolls.
The market remains in a consolidation. Sugar prices have held their ground in the upper portion of their recent range and have improving global risk sentiment and stronger key outside markets working in their favor. The market could see a retest of the early June highs, but a bearish global supply outlook will make it difficult for sugar to extend this week’s recovery move.
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