Negative Tilt For Coffee
With the prospect for improved global demand later this year, cocoa can extend its recovery move towards a retest of its late November high. Strong rallies by European and US equity markets to begin the month of March provided cocoa with carryover support as they should help to further soothe near-term global demand concerns.
After 2 weeks of sharp gains, coffee appears to be consolidating. A positive longer-term demand outlook and bullish supply factors continue to provide support. Steep gains last week and for the month of February continued to leave coffee prices vulnerable to profit-taking in-line with the weakness seen in energy and grain markets.
The market is attempting a quick recovery from the reversal last week but the technical set-up is still bearish and the market seems vulnerable to a more serious downside correction. May cotton closed strong yesterday, recovering a good portion of its steep correction from last Thursday and Friday.
While sugar has a bullish longer-term supply/demand outlook, the market continues to be pressured by weakness in its key outside markets. Until energy prices and the Brazilian currency regain their strength, sugar prices may remain on the defensive.
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