Sluggish Demand Outlook For Cocoa
Cocoa has seen a bullish shift in the longer-term supply outlook, but should remain relatively well supplied during the first weeks of the West African 2021/22 main crop harvest. As a result, demand concerns continue to hold a front and center position with the cocoa market and are keeping prices on the defensive early this week.
Coffee’s upside breakout move appears to have run out of steam going into the end of the third quarter, but the market continues to have bullish supply factors and signs of improving global demand providing support. While it may be vulnerable to early pressure today, coffee should remain fairly well supported on a near-term pullback.
December cotton closed higher for the fifth session in a row yesterday and sharply higher for the third session in a row after busting through the August contract high. This took the nearby contract to its highest level since January 2012. The markets have rallied over the past few sessions on ideas that Chinese demand will remain strong.
Sugar prices received carryover support from a key outside market as well as further confirmation of Brazil’s production shortfall this season, but were unable to sustain upside momentum yesterday. With the market in jeopardy of only its second monthly decline over the past 16 months, sugar may be vulnerable to profit-taking and additional long liquidation through the end of the month and quarter.