Cotton Sold Off Sharply
Cocoa finished July more than 130 points above an eleven-month low from July 20th. The near-term demand outlook is likely to remain a source of pressure over the next few weeks, but cocoa is showing more signs that a longer-term low has been put in. For the week, however, December cocoa finished with a gain of 58 points (up 2.4%) which broke a 2-week losing streak and was only the second positive weekly result since mid-May.
The more than 59 cent price range that December coffee traded within during the past 2 weeks was nearly as large as the more than 66 cent range the market traded in during the previous 2 1/2 years. Although the market is likely to see downside follow-through early this week, July’s frost damage to Brazil’s coffee trees should provide longer-term support to coffee prices.
December cotton sold off sharply on Friday and closed at their lowest level since July 21. Traders were disappointed in the market’s failure to follow-through on Wednesday’s move to new contract highs, and some may have been anxious to take profits going into the weekend. The dollar recovered after Thursday’s steep selloff, may have added to the longs’ nervousness.
In spite of the Thursday/Friday pullback, sugar prices were able to extend their monthly winning streak to four in a row with a twelfth positive monthly result over the past 14 months. The market was unable to hold onto early strength Friday as it turned sharply to the downside and followed through on Thursday’s negative daily key reversal.
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