Coffee Supply Outlook Tightening
December cocoa finished with a sizable gain yesterday. Expectations that major West African producers will see a decline in their cocoa production during the upcoming 2021/22 season provided a boost to the market, particularly after a Nigerian trade group estimated their nation would have a 12% decline from this season’s output.
Coffee has bullish supply developments in Brazil and Colombia to provide underlying support, but near-term demand remains a question mark while the Delta COVID variant is spreading. While coffee prices have been unable to retest Tuesday’s 5-week high, they remain on track for a second positive weekly result in a row.
The market may have found support from a weaker dollar and a strong stock market yesterday. The Dollar Index extended Wednesday’s losses to trade to its lowest level since August 5. US cotton export sales for the week ending August 26 came in at 105,225 bales for the 2021/22 (current) marketing year and 23,760 for 2022/23 for a total of 128,985.
Sugar prices have held within 1.00 cent of their mid-August high for the past 2 1/2 weeks. While a bullish supply outlook will continue to underpin prices, sugar may need additional carryover support from key outside markets in order to trend higher.
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