Cotton Waits For USDA Outlook
While the cocoa market has a positive longer-term demand outlook, near-term demand concerns remain a major source of pressure. Unless there is a positive turnaround from key outside markets, cocoa may be heading for a retest of its mid-December lows.
The market may be closing in on a near-term floor. A more than 1.5% decline in the Brazilian currency as it dropped to a new 8-week low was a major source of carryover pressure on the coffee market, as a weaker Real will make Brazil’s producers more aggressive with marketing their remaining 2020/21 coffee supplies.
The results of the report today should set the tone. For today’s monthly USDA report, US cotton 2020/21 ending stocks are expected to come in at 5.39 million bales versus 5.70 million in the December report. US production is expected to come in at 15.66 million bales (range 15.10-16.00 million) versus 15.95 million in December.
Sugar was able to find its footing yesterday and did so with little carryover support from its key outside markets. While Brazil’s Center-South 2021/22 sugar production should see a notable decline from this season’s output, their 2020/21 exports are on-course for a record high total.
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