Good Cocoa Supply Limits Advance
After declining over 160 points over the previous 3 sessions and losing nearly 7% in value, cocoa prices appear to have found some near-term footing. While there has been some improvement in global risk sentiment, cocoa may need to see more progress in reducing near-term demand concerns before it can make a large-scale extension to any recovery move.
Weather issues have already had a significant impact on Brazil’s 2020/21 Arabica production, and there is increasing concern that this week’s events will further diminish the crop. If there are fresh signs that global demand may improve, coffee prices should climb well above the June and July highs.
December cotton closed higher yesterday, recovering most of its losses from the previous session. The Dollar Index closed higher after trading to its highest level since April 1, which is negative for cotton, but the stock market was sharply higher, which is supportive.
Sugar prices have had trouble sustaining upside momentum and remain well below the early July high. The market is receiving fresh bullish supply news as key outside markets are having a positive turnaround, however, and that can help sugar to extend a recovery move.
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