Huge India Sugar Crop Limits Upside
Cocoa will continue to have near-term demand concerns until most of the major demand regions (Europe, Asia and North America) relax their COVID restrictions and allow for more travel between nations. Recent price action may indicate a shift in focus towards a much more positive longer-term demand outlook, and that would result in cocoa lifting clear of their 2021 price lows.
Coffee’s inability to regain upside momentum and retest its early June high set the stage for Monday’s downside breakout. The gap of the uptrend channel on Monday was seen as a bearish force. With a sizable net spec long position in the latest COT report, coffee may see further downside action before it can find a near-term floor.
December cotton fell sharply yesterday to its lowest price level since June 1, but it managed to close well off its earlier lows and the market bounced off of the 50-day moving average. The market was down the 4.00-cent limit at one point. Cotton fell in sympathy with the corn and soybean markets, which were down off an improved weather outlook and the possible relaxing of renewable fuel standards, which would undermine ethanol and biodiesel demand.
Sugar’s tight coiling price pattern left the market vulnerable to a downside breakout move, so it did not take much in the way of bearish near-term supply news to have the market drop well below its recent consolidation zone. However, the fact that prices climb back into their consolidation range by the close indicates that sugar continues to have a bullish supply outlook. Another huge crop expected for India may limit upside.
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