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Bullish Demand Outlook Keeps Buyers Active


While cocoa prices have made a sluggish start to the new year, the market continues to find support from bullish supply factors and a positive longer-term demand outlook. As long as global markets can avoid a negative shift in sentiment, cocoa should be able to find decent support.


While the market has been vulnerable to additional long liquidation over the past few weeks, coffee continues to have a bullish supply outlook for the 2021/22 and upcoming 2022/23 seasons. The market is showing more signs that a near-term low has been put in place. The Brazilian analytics group Cepea forecast their nation’s upcoming 2022/23 coffee production would be low for an “on-year” crop, which provided significant support to the market.


March cotton broke out of its latest consolidation range yesterday and traded to its highest level since November 17th. That was the day the market put in its contract high, which is only 0.82 cents above yesterday’s high. The stock market made new all-time highs early this morning, and this this lent support to cotton on ideas that a strong economy would keep cotton demand strong. Cotton may have also been supported by higher crude oil prices that make man-made fibers more expensive.


Sugar prices have had difficulty extending an upside move since reaching their 2021 highs in mid-August as the market has been pressured by increased production from Thailand and India. However, the prospect of stronger energy prices can help to trigger a positive turnaround in sugar prices.

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