Frost Impacts Brazil Crop
Cocoa continues to find support from a bullish shift in its 2021/22 production outlook and has regained a large portion of its 3-session/119 point pullback. Near-term demand concerns continue to pressure the market, however, and that could mean that cocoa prices may have limited upside from current levels.
Coffee prices have yet to recover a large portion of the late July downdraft, but the market continues to receive bullish Brazilian supply developments. December coffee was able to rebound from early pressure and reached a 1-week high yesterday and closed higher for a fourth positive daily result in a row. Brazil’s Agricultural Minister said that last month’s frost could impact 18% to 20% of that nation’s coffee crop, which compares with their earlier estimate that 11% of the crop was impacted.
December cotton closed higher for the 4th session in a row yesterday and tested the key 95.00 level. The Dollar Index was slightly lower, which was moderately supportive to cotton and another new high for the stock market helped to support, as cotton has been following the stock market action closely.
With key outside markets working in its favor, sugar may be able to regain upside momentum soon. Forecasts that India will start out the upcoming 2021/22 season with sugar stocks at a 4-year low provided support to the market, as that reflects the record high exports India should have this season.
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