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Demand Takes Center Stage in Cotton


Although there was a positive turnaround in global risk sentiment, near-term demand concerns remain a front-and-center issue for many commodity markets. Cocoa prices may be into “bargain” price territory now, but will need more clarity on the Omicron COVID variant in order to sustain a recovery move.


Coffee had a sizable monthly gain and quarterly gain going into the final 2 sessions of November due to bullish supply developments with most of the largest Arabica-producing nations. The near-term outlook for out-of-home consumption remains unclear during the early stages of the Omicron COVID variant, however, and that has put coffee prices on the defensive.


March cotton closed moderately lower yesterday after spending the day inside Friday’s wide range. The market broke lower on the Covid news on Friday and did little to retrace that move on Monday. With the US harvest mostly complete, demand takes center stage in the cotton market, and with Covid offering a new hiccup in demand expectations and the market just last week reaching new contract highs, the selloff is not surprising.


While global risk sentiment and its key outside markets had a positive start to the week, sugar prices were unable to benefit and are now on-course for a third negative monthly result in a row. With a sizable net spec long position, sugar remains vulnerable to a wave of long liquidation.

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