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No Sign of Peak in Cotton


Over the space of 3 1/2 weeks, cocoa prices have gone from a 9-month low to a 5-month high as bullish supply-side developments have added to a positive longer-term demand outlook. The market may have gotten ahead of itself during the more than 330 point recovery move, however and may be vulnerable to a near-term pullback.


While coffee prices have lost upside momentum, they will start this week’s trading above their early August consolidation zone. With clear signs that Brazil’s upcoming production has been impacted by frost damage, coffee should be able to extend this current recovery move.


December cotton has posted new contract highs for the fourth session in a row. The dollar sold of sharply on Friday, and that added support to US export commodities like cotton. A key factor in the rally late last week was Thursday’s USDA supply/demand update, which lowered US harvested acreage for 2021/22 to 10.36 million acres from 10.50 million in the July report and average yield to 800 pounds/acre from 814.


Sugar’s August updraft has taken prices above the 20.00 cent level for the first time in 4 1/2 years. While Brazil’s Center-South cane crop has been impacted by last month’s frost, the market has risen into near-term overbought levels and may be vulnerable to a near-term setback.

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