Coffee Futures Higher
There have been more indications that demand should see some improvement over the rest of this year. As a result, positive supply/demand developments have been able to overcome lukewarm key outside markets to help cocoa prices maintain their upside momentum.
While there is still a long way to go before conditions return to pre-pandemic levels, coffee should remain well supported on near-term pullbacks. September coffee rallied to a new 11-week high yesterday but closed lower. While there are cooler temperatures in the forecast, mostly dry conditions over Brazilian Arabica growing areas weighed on coffee as that should help to minimize further delays for this year’s harvest. Lukewarm global stock markets do not bode well for near-term demand, and that weighed on coffee prices.
Concerns about demand in the face of increasing coronavirus cases in the US and escalating US/China tensions has helped to pressure. There are still some concerns about damage to crops along the Texas coast from Hurricane Hanna over the weekend and to the west Texas crop from the extended dry period earlier this summer. It is still too early to tell about the damage this weekend, but the Texas crop overall appears to have stabilized, albeit at worse conditions than average.
Sugar’s abrupt change in direction at the start of this week was due in part to bullish supply developments out of Thailand, so a change in their weather has put some brakes on its recovery. The market continues to have problems climbing above and beyond the June and July highs, and could see a near-term pullback if key outside markets do not show significant improvement.
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