USDA Report Shows Firm Demand
The cocoa market has been able to lift clear again from the lower portion of its July/September consolidation zone, as it has received some relief from demand concerns that have weighed on prices for more than two years. With bullish supply factors likely to continue into the upcoming 2022/23 season, cocoa is in a good position to extend a recovery move. Global risk sentiment, European and US equity markets all continued to improve early this week, and that provided carryover support to the cocoa market.
Coffee prices have been unable to put together back-to-back positive daily results since mid-August as the market has been unable to fully shake off near-term demand concerns. While the demand outlook may be improving, coffee is now receiving bearish near-term supply news that is weighing on prices.
The USDA report showed US 2022/23 cotton production came in at 13.83 million bales versus an average trade expectation of 12.77 million bales (range of expectations from 12.20 to 13.50 million) and up from 12.57 million in the August update. Ending stocks came in at 2.70 million bales versus 1.86 million expected (range 1.50-2.50) and 1.80 million in August. Even with the revisions higher, ending stocks are projected to be the lowest they have been since 1995/96.
Sugar prices continue to hold their ground above the late August/early September low as they maintain a coiling pattern. While global risk sentiment is showing signs of improvement, sugar needs to see bullish supply developments to turn up. Tight near-term supplies continue to underpin sugar prices early this week, with reports that many of India’s mills will not sign new export contracts until prices rise further.
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