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Coffee, Softs Higher


Cocoa prices have only had one negative daily result over the past 11 sessions as the market continues to benefit from improving global risk sentiment. Although it is near-term overbought and vulnerable to a pullback, cocoa looks to be heading towards higher price levels. December cocoa was able to push to a new 5-month high overnight.


A 12.50 cent decline (down 9.7%) from midsession Wednesday to midsession Friday helped to correct the short-term overbought condition. For the week, December coffee finished with a loss of 3.70 cents (down 3.0%) which broke a 3-week winning streak and was a negative weekly reversal from Wednesday’s 4 1/2 month high. Concern over harvesting issues with several major producing nations provided support to the market over the past few weeks as the Safras & Mercado consultancy pegged Brazil’s 2020/21 Arabica harvest at 79% completed versus 91% at this point last year.


December cotton plummeted on Friday in a steep selloff that took it to its lowest level since July 31, for the biggest daily decline in four months. Traders apparently became concerned that the market may have rallied too far and were anxious to level positions ahead of this week’s USDA crop reports. There has been an underlying tone of concern about demand destruction from the coronavirus and with the recent flare-up in US-China tensions.


Sugar prices spent the first week of August coiling within a relatively tight trading range. Unless it can find fresh carryover support from key outside markets, sugar will be vulnerable to a further correction. For the week, October sugar finished with a gain of 3 ticks (up 0.2%) and a second positive weekly result in a row. A more than 1.5% decline in the value of the Brazilian currency weighed on sugar prices Friday as a weaker currency encourages their nation’s Center-South mills to produce more sugar at the expense of ethanol.

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