Trade Choppy in Coffee
For much of 2021 so far, cocoa prices have been weighed down by near-term demand concerns with the market’s focus shifting from Europe towards Asia. The longer-term demand outlook has been and should remain fairly positive with more COVID vaccine use, and that has helped the cocoa market stabilize.
Although the longer-term supply outlook remains bullish, coffee is showing some signs that it is setting up for a near-term pullback. A new multi-year high for ICE exchange coffee stocks after they rose by 3,277 bags weighed on coffee prices as that showed further evidence of lukewarm near-term European demand.
December cotton remains in a short-term uptrend even with improving crop conditions. Cotton drew some support yesterday from stronger corn and soybean markets. Cotton conditions improved last week, particularly in Texas, and that could put pressure on cotton if outside market support wanes. The 6-10-day forecast calls for below normal precipitation in West Texas, while conditions turn towards normal in the 8-14 day. Texas was rated 29% good/excellent this week versus a 10-year average of 39%.
While sugar prices continue to have trouble sustaining upside momentum this month, they remain within striking distance of a new multi-year high. Continued strength in the Brazilian currency which remains in close proximity to 5 1/2 month highs has provided underlying support to the sugar market as that eases pressure on Brazil’s Center-South mills to produce sugar for export.
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