Improving Demand For Coffee
While global risk sentiment remains positive, near-term demand concerns continue to keep cocoa prices within their recent consolidation zone. The market continues to hold above its December and January lows, as there have been positive supply-side developments that have underpinned prices.
Coffee prices have held within a 3.50 cent range over the past 2 sessions as the market was unable to see upside follow-through from last Thursday’s wide sweeping positive reversal. While surprising bearish near-term supply news added to the market’s ongoing demand woes, coffee’s more bullish longer-term outlook should keep prices well clear of last Thursday’s low.
The dollar was weaker and the stock market stronger, and both of the forces helped to support the solid gains yesterday and follow-through to the upside today. The trade is looking for a bullish USDA supply/demand report today, with a revision higher expected in US exports for 2020/21 and revisions lower in US production and ending stocks.
While it remains on-track for a tenth monthly gain in a row, sugar’s late turnaround on Monday may give some longs pause for thought given that prices have risen 4.30 cents (up 38%) during that timeframe. As long as global risk sentiment and its key outside markets remain fairly strong, sugar prices should remain fairly well supported on near-term pullbacks.
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