Cocoa Oversold Technically
Cocoa will see demand improvement as global economies continue to recover, but COVID setbacks (particularly in Europe) are pushing that improvement further into the future. While there have been some mildly bullish supply-side developments, they have not been enough to sustain upside momentum.
While coffee has been pressured by near-term demand concerns since the end of February, the market is showing early signs that a near-term low may be in. With a bullish supply outlook providing underlying support, coffee can continue to hold its ground above its 200-day moving average.
The technical action remains weak and even with very bullish outside market forces yesterday, the market closed lower. The export data remains positive and there could be some tightening of old crop stocks, but it still will not be tight.
Sugar prices were able to put some brakes on their recent pullback, and did so in spite of significant carryover pressure from key outside markets. With fresh bullish supply news providing support, sugar has a good chance of lifting clear of last week’s lows.
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