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Demand Concerns Subside in Cocoa


In addition to recent bullish supply developments, cocoa is starting to see demand concerns subside. With the market heading for a second global production deficit in a row, cocoa should maintain upside momentum. July cocoa benefited from strength in key outside markets as well as bullish demand news as it finished Thursday’s trading session with a sizable gain. The European Cocoa Association (ECA) said that European first quarter grindings came in 375,375 tonnes which was 0.5% above last year’s total and slightly above market expectations.

Gold bull & bear


Coffee prices have risen 14% in value during the first 8 sessions of April as the market found strong support from bullish supply news. With global risk sentiment on the mend, coffee can extend the rally. Colombia’s coffee growers federation said that their nation’s March production was only 799,000 bags, which was 13% below last year’s total and their lowest monthly production total since last April. As a result, this puts Colombia’s coffee production over the past 12 months at 11.066 million bags, which is their lowest 12-month running production total since January 2014.


The close back above 82.96 for July cotton is a positive technical development. A lower-than-expected PPI number pressured the dollar and supported the stock market. Further evidence that inflation has been tamed encouraged ideas that the Fed rate-hike regime will soon be over. The weekly export sales report showed US cotton sales were down from the previous week, but shipments were the second highest since August. The report showed export sales for the week ending April 6 at 143,203 bales for the 2022/23 (current) marketing year and 11,078 for 2023/24 for a total of 154,281. This was down from 176,399 the previous week and the lowest since March 2.


While the market was able to avoid downside follow-through from Wednesday’s negative key reversal, sugar may need to find fresh bullish supply news in order to avoid increased selling if support is violated. Indications that this season’s sugar production in India, China and the EU will come in below last season’s output has helped to fuel sugar’s more than 3.00 cent rally during the past 3 weeks. China has been one of the world’s largest sugar importing nations, and are expected to see this season’s imports come in above their government’s current estimate of 5 million tonnes.


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