Cocoa prices will remain near their current low levels next season, Commerzbank said, while cotton markets will be "unable to soar".

With global cocoa production predicted to outstrip demand this season, and possibly in the next as well, "it will no doubt be difficult for prices to return to the high of this summer in the near future," Commerzbank said.

"KnowledgeCharts expects a surplus of 221,000 tonnes, commodity trading house Cargill over 200,000 tonnes".

And the bank noted "talk of another surplus in 2017-18".

London markets will also have to deal with the recovering sterling, although the launchign of Brexit negotiations next year cast uncertainty over this issue.

Bearish factors 'factored in'

"Many factors reported that have a negative impact on prices have thus already been factored in," the bank said.

But "pressure could increase again, though, if more net short positions are built up.

The bank forecast prices at £1,900 a tonne over the last three months of 2017.

December London cocoa futures are trading at £1,911 a tonne.

Synthetic fibre competition

Despite expectations of a cotton deficit next season, Commerzbank said, prices for the fibre "will find themselves unable to soar".

"Any price rise would also have to be fairly limited, as otherwise it would make natural cotton less able to compete with synthetic fibres," Commerzbank said.

The bank forecast cotton prices in the last three months of 2017 at 71 cents a pound.

December 2017 cotton futures are trading at 69.60 cents a pound.

Cash shortage in India

The bank saw recent cotton price support coming in particular from "the shortage of cash in India".

"In early November, the government withdrew the old 500 and 1,000 rupee banknotes, which has resulted in payment problems, delivery delays and an increase in domestic cotton prices."

"Because India is an important cotton exporter, the available supply on the world market is also tightening as a result, and other suppliers such as the US are likely to profit from increased demand."

Sugar resilient

But sugar prices will hold near current levels, despite recent downgrades to the forecast for the 2016-17 production deficit.

Although production could outstrip demand next season, Commerzbank said "the sugar market can be expected to remain sufficiently strained to justify prices close to 20 cents a pound".

The bank saw prices at 19 cents a pound the third quarter of 2017.

October raw sugar prices are trading at 18.14 cents a pound