Cocoa Prices Lower
Cocoa is clearly benefiting from improved global risk sentiment as that should help to soothe ongoing concern with near-term demand prospects. The market is finding bullish supply-side support as well, however, and that can help cocoa to maintain upside momentum.
While coffee may be near-term overbought and vulnerable to long liquidation, it should remain fairly well supported on a near-term pullback. The hook reversal yesterday is a short-term negative force and a correction may be needed but the trend has turned up. Last week’s positive forward guidance from Starbucks and Nestle helped to strengthen coffee’s near-term demand outlook, and that provided the market with early support.
The cotton trade is once again worrying about weather and putting aside concerns about demand, December cotton to its highest level since July 13 yesterday. The 6-10 and 8-14 day forecast is calling for above normal temperatures and below normal precipitation across the central part of the US including most of Texas, Oklahoma and Kansas.
Sugar prices are holding their ground above the recent consolidation zone and posted a second close above the 200-day moving average for the first time since early March. While improving global risk sentiment is working in its favor, sugar still has a bearish global supply outlook that should limit further near-term upside.
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