Cotton Supply Smaller
Cocoa prices continue to face headwinds from lukewarm global risk sentiment and negative key outside markets, but they are also finding support from West African supply issues. If a “risk on” mood develops in commodity markets, cocoa should be able to regain and sustain upside momentum.
Coffee prices have seen volatile action since mid-November, but they continue to hold their ground above their 3 major moving averages. While near-term Brazilian supply from their near-record 2020/21 crop continues to be drawn down, bullish near-term supply developments should help to underpin coffee prices.
The weaker dollar, stronger stock market, and a general “risk-on” mentality lent support to cotton yesterday. For Thursday’s USDA supply/demand report, traders are looking for reductions in US and world production and ending stocks for 2020/21. The average trade estimate for US production is 16.74 million bales (range 16.30-17.09 million), down from 17.09 in the November report.
Sugar prices have been unable to shake off a coiling price pattern as they grind their way lower, and for a second session in a row were unable to benefit from notable strength in a key outside market. Unless a “risk on” mood redevelops in global markets, sugar will have a difficult time regaining upside momentum.
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