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Ethanol Demand May Lower Sugar Production


While near-term demand concerns have increased due to the Russian invasion on Ukraine and new Chinese COVID lockdowns, cocoa prices have been strengthened by bullish West African supply developments. While carryover pressure from key outside markets has been ramped up, cocoa may have the fundamentals to trade higher.


Coffee prices have been able to hold their ground well above last week’s low in spite of negative near-term demand factors. With a bullish longer-term supply outlook providing support, coffee can extend this recovery move. A key source of strength was the Brazilian currency which gained more than 1% in value and reached a new 21-month high, as recent currency strength will ease pressure on Brazil’s farmer to market their remaining near-term supply.


For the third time in four sessions, May cotton traded to a new contract high yesterday, and it closed at its highest level in a decade. The trade is talking about tight supplies and delays in shipping. Much of west Texas and Oklahoma are under extreme or exceptional drought, which threatens cotton production this year if conditions do not change.


Sugar prices continue to receive strong support from key outside markets that has helped the market overcome bearish near-term supply factors. With Brazil’s Center-South region approaching the start of their cane-harvest, sugar should see a bullish shift in the supply outlook that can help the market sustain upside momentum.

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