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Demand Issues No Impact For Cocoa


New contract highs this morning in the face of bearish outside market forces is an impressive move. The market is becoming increasingly overbought. Sluggish European and US equity markets and a pullback in the Eurocurrency weighed on cocoa prices early yesterday.


Although it continues to have a bullish supply outlook, coffee may have some trouble overcoming a negative shift in near-term demand prospects. The Brazilian currency dropped down to a 1-month low which put carryover pressure on the coffee market as that gives Brazil’s farmers more incentive to market their near-term coffee supply to foreign customers.


While the market closed well off of the highs, the higher close and another new contract high for December cotton is a bullish technical development. The higher close in the face of sharply lower trade in the stock market, a surge higher in the US dollar and weakness in metals and energy markets was an impressive feat yesterday.


Sugar prices have reached 4 1/2 year highs this week, but are showing early signs of losing upside momentum. Unless it can find carryover support from key outside markets, sugar could be vulnerable to a corrective break.

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