Cocoa Demand on The Rise
After rallying nearly 300 points from its mid-November spike low, cocoa’s recovery move has started to run out of steam. With the market in danger of a negative weekly reversal from a 3-month high, continued weakness in global risk sentiment could fuel profit-taking and additional long liquidation.
While they have shown early signs of finding their footing, coffee prices have been unable to put any brakes on their near-term pullback. Sluggish global risk sentiment may keep the market on the defensive, but coffee may be able to find its footing before prices drop down to levels seen during their November/February consolidation zone.
The dollar was up sharply yesterday and more today, and the stock market sold off sharply, and these moves contributed to cotton’s weakness. Cotton seemed to get a modest lift from the weekly export sales report, which came in above 200,000 bales for the second week in a row,
While sugar has been unable to sustain upside momentum since a negative daily reversal in late February, the market is beginning to show some signs that support is close at hand. Huge rallies in crude oil and RBOB gasoline up to new multi-year highs provided significant carryover support to the sugar market as that should further strengthen Brazilian domestic ethanol demand.
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