New Contract Highs For Dec Cotton
Cocoa prices remain near the bottom end of their May downdraft, due in large part to near-term demand concerns that have been a source of pressure on the market for over 2 years. With bullish supply-side developments providing support, cocoa has a good chance of extending a recovery move.
The coffee market gave back a good portion of the gains on Thursday and Friday, due in part to weakness in the Brazilian currency which has lost more than 10% in value since mid-April. For the week, July coffee finished with a gain of 3.45 cents (up 1.7%) which broke a 2-week losing streak and was a positive weekly reversal from Tuesday’s 6 1/2 month low. It has been weather issues with major South American Arabica producers have helped to lift coffee prices well above the recent lows.
July cotton closed near unchanged on Friday after spending the day inside Thursday’s range. December cotton continued its gains in the wake of the USDA report, which showed a drop in US production for 2022/23 and the lowest ending stocks since 2016/17. December cotton pushed into new contract highs today. The US crop is barely in the ground, and traders are very concerned about this year’s prospects, particularly because of the ongoing drought situation in west Texas.
Sugar’s abrupt turnaround at the end of last week recovered a sizable portion of the market’s losses during its April/May pullback. Although strength in key outside markets continues to be a major factor, sugar has seen bullish supply development that can fuel an extended recovery move. Crude oil and RBOB gasoline extended their recovery move which in turn provided the sugar market with carryover support.
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