New 6.5yr High for Cocoa?
Cocoa prices are holding within their near-term consolidation zone and will start today’s trading 30 points away from a new 6 1/2 year high. In spite of carryover support from key outside markets, the market has consolidated. Global risk sentiment remained subdued, which pressured cocoa as that may weaken near-term demand prospects. A rally in the Eurocurrency and British Pound provided cocoa with carryover support as that will make it easier for European grinders to acquire near-term supplies. The latest weekly Ivory Coast port arrivals total came in below the comparable period last year, and that has kept their full-season arrivals total well behind last season’s pace.
Unless the market can find fresh bullish supply news, coffee is vulnerable to further downside price action. Above average rainfall over Brazilian growing areas provided some support as that may lead to early delays for their upcoming Arabica harvest. Although Brazil’s 2023/24 Arabica crop is an “off-year” in their 2-year cycle, there are growing expectations that it will exceed 2022/23’s “on-year” crop. London Robusta coffee prices reached an 11-year high following reports that Vietnam’s near-term stocks are nearly exhausted, and that provided carryover support to the New York Arabica coffee market.
July cotton closed moderately higher on Monday but was still confined to the bottom half of last Thursday’s big range down. Outside markets were mixed. The dollar broke below recent consolidation, which lent some support. Crude oil was higher as well, which was supportive, but the stock market was lower. Wetter conditions in west Texas have put pressure on the cotton market in recent days. The area is still under significant drought, but it has improved since last year.
For the second time in less than a week, the sugar market has followed a negative daily key reversal with an outside-day higher close and a new contract high the next day. While the market is well into overbought territory, sugar prices are showing few signs of being close to a near-term top. July sugar reached an 11-year high before finishing Monday’s outside-day trading session with a very large gain. Crude oil and RBOB gasoline prices extended their recovery move through the weekend, and that provided the sugar market with carryover support as that may help to improve near-term ethanol demand.
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