Demand Optimism in Sugar
Cocoa’s abrupt change in fortune may be further evidence that last week’s spike low may become a longer-term price floor. The market continues to deal with near-term demand concerns that continue to weigh on prices, however, and that leaves cocoa vulnerable to selling.
Coffee remains on-track for a second monthly gain in a row and should close out the year well above its early November lows. Near-term demand remains a concern as long as COVID shutdowns remain in place. The potential for Brazil’s upcoming “off-year” crop to decline 30% from this season’s total continues to underpin prices.
The upside break-out leaves 78.60 as the next upside target for March cotton. The market traded through the December 18th highs to its highest level since April 2019 basis the nearby contract. Another decline in the dollar, new highs for equities, and optimism regarding US exports help send the cotton market higher.
Sugar prices are back to within striking distance of new multi-year highs and are on-track for an eight monthly gain and a third quarterly gain in a row. An improving demand outlook can help to keep sugar well supported. March sugar bounced to a new 5-week high and closed higher for the seventh day in a row.
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