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December cocoa followed through on Monday’s negative reversal as it posted a sizable loss. While precious metal do not normally have a strong correlation with cocoa, a more that $100 selloff in gold and a $4 washout in silver triggered long liquidation and profit-taking in a cocoa market that had risen 420 points (up 19.9%) from its early July contract low up to Monday’s 5-month high.


Coffee’s 5-session losing streak has taken prices halfway back from its June/August upmove. While a negative shift in global risk sentiment fueled long liquidation, coffee continues to find support from bullish supply/demand developments. There has been a shift towards drier and warmer weather over major Brazilian Arabica-growing regions this week, and that weighed on coffee prices as those conditions will help with this year’s harvest which is behind last year’s pace due in part to labor availability issues.


The results of the USDA report will set the tone for the Cotton market today. The 6-10 and forecast shows some normal to above normal precipitation moving into the eastern two-thirds of Texas, while west Texas, the Panhandle and Oklahoma show below normal precipitation. The 5-day forecast has little or no rainfall for Texas, except for the far eastern part.


Sugar prices are holding their ground within the recent consolidation zone, and have done so in spite of a negative shift in global risk sentiment. While key outside markets have provided carryover support, the market received a fresh reminder of sugar’s bearish global supply outlook.

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