Coffee Choppy But Trend Higher
Cocoa’s abrupt turnaround last Thursday led to a 2-day updraft of 116 points (up 4.6%) as the market shifted focus from ample near-term supply to the prospects for upcoming production. For the week, December cocoa finished with a gain of 72 points (up 2.8%). Rising concern with upcoming West African production continues to underpin cocoa prices following news that a Nigerian trade group forecast their nation’s 2021/22 cocoa output would fall 12% from this season.
While coffee prices have started September on a downbeat note, they are holding their ground above the August consolidation zone and well above the August lows. With a bullish supply outlook providing underlying support, coffee may be able to regain upside momentum soon.
The technical action remains positive but the supply fundamentals may sour for the USDA report late this week. December cotton closed higher on Friday, solidly back into a two-week range bounded roughly by 91.80 and 95.00. The dollar sold off sharply for the second straight day on Friday, and this added to support for cotton.
While sugar prices have started September by falling back from last Tuesday’s high, the market has held within a relatively tight trading range over the past 3 1/2 weeks in spite of volatile action in its key outside markets. With bullish supply developments providing support, sugar can benefit from stronger global risk sentiment.
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