Positive Production Outlook in Coffee
With Brazil looking at a sharp output decline during the 2021/22 season while Central American producers continue to recover from last November’s severe storms, a potential pullback in Colombia’s production during the first half of this year is further evidence of a bullish global supply outlook in coffee.
Cocoa is unlikely to get past near-term demand concerns until Europe sees declining new COVID case counts and relaxed shutdown measures. The Eurocurrency reached a new 4 1/2 month low while European equity markets finished the day in negative territory, both of which kept further cocoa gains in check yesterday as they reflect lukewarm European demand prospects.
May cotton sold off sharply yesterday to its lowest level since December 31 and closed limit down. In the process, the market slashed through key support levels. The dollar was up sharply for the third session in a row, with the June Dollar Index trading to its highest level since mid-November.
Sugar’s chaotic price action over the past 2 weeks has left prices nearly 2.50 cents (down 13.8%) below its multi-year high in late February. Unless it can find consistent carryover support from key outside markets, sugar prices will be vulnerable to additional long liquidation.
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