OI in Cocoa Still on The Rise
Cocoa prices have fallen back from last Monday’s 9-month high, but remain well supported after climbing well above their January lows. With the market receiving critical demand-side data later this week, recent bullish supply developments can help cocoa to extend its current recovery move. For the week, March cocoa finished with a gain of 46 points (up 1.8%) which was a third positive weekly result over the past 4 weeks. Stronger equity markets in Europe and the US provided cocoa prices with carryover support. In order to sustain a recovery move, coffee needs to see additional signs that global demand is improving.
For the week, March coffee finished with a loss of 6.60 cents (down 4.2%) which was a third negative weekly result in a row. The Brazilian currency remains close to 7-week highs, which provided the coffee market with carryover support as that should ease pressure on Brazilian producers to market their coffee supply to foreign customers. Concern with global demand prospects continue to weigh on coffee prices.
March cotton closed slightly lower on the session Friday with choppy and two-sided trade, but the market closed 3.9% lower for the week. The bearish tilt to the USDA supply/demand report helped to limit any recovery bounce. The jump and US production, US ending stocks and an adjustment lower in global demand were all seen as bearish forces. The surge higher in crude oil helped to provide some support. Global 22-23 consumption was revised 0.8% lower than projected for December which helped to boost stocks.
The sugar market put together a strong rally late in December that took it to its highest level since February 2017, as it received carryover support from stronger energy prices and benefited from expectations of lower output this season for several key producers. Global 2022/23 production remains on-track to reach a record high, however, so the sugar market could drop to much lower price levels during the first quarter.
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