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Bullish Cocoa Supply Factors Longer-Term


There was above average rainfall over many West African growing areas last week, and that follows drier than normal conditions over the past few weeks. Daily high temperatures in West Africa growing areas have been above average during April, however, and that may offset and benefit for the region’s upcoming mid-crop cocoa production. Some recent estimates have Ghana’s mid-crop output this year at less than one-third last year’s production level.


Coffee prices continue to face pressure from near-term demand concerns, particularly in Europe where out-of-home consumption has been diminished by Russia’s invasion of Ukraine. The market continues to receive bullish supply news, and that should help to keep coffee prices supported on breaks.


July cotton closed higher yesterday but spent the session inside Thursday’s wide range. The market had closed lower on Thursday with a key reversal which can sometimes be seen as a sign of a possible top. However, for confirmation of a key reversal, July cotton will need to see selling pressure below 139.34. The market managed to close higher in the face of outside market pressure from a stronger dollar and weaker stock market.


Sugar prices found significant carryover support from key outside markets, but have been unable to take out the key reversal top at 20.46 from April 13th. With global risk sentiment remaining volatile after the holiday weekend, sugar is vulnerable to a sizable downside move this week. Energy prices extended their recovery move with crude oil and RBOB gasoline both reaching 3-week highs, and that provided carryover support. A more than 1% rally in the Brazilian currency provided sugar prices with additional strength.

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