Choppy Consolidation in Cotton
While the market will remain concerned until many more COVID restrictions are relaxed, cocoa received some positive demand-side news coming out of the weekend. In order to sustain an upside move, however, cocoa needs to receive fresh supply-side news as well.
Coffee has held within a 4 cent trading range over the past 2 sessions as the market is seeing tightening coiling price action. While it has failed to sustain upside momentum this month, coffee is showing early signs that it will hold its ground above the August and September lows.
Technically, the market remains in a choppy consolidation period but with high open interest, improving crop conditions, some late-season warm weather which will boost yield prospects in Texas and the increase in ending stocks from the USDA report Friday, the market is vulnerable to increased selling if support levels are violated. The lower close yesterday with strength in the stock market and strength in energy prices is a bearish development.
While sugar remains well below its late-August high, it appears to have found its footing after successfully retesting its 50-day moving average. If key outside markets can hold onto a positive tone, sugar can extend a recovery move back towards its August/September consolidation zone.
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