Sharp Drop in Cotton Production
Cocoa prices remain near the bottom end of their November/January downtrend and have not put together 3 positive daily results in a row since mid-November. While near-term demand concerns continue to weigh on the market, cocoa’s coiling price may be an early sign that a longer-term low may be in.
Although the market continues to receive evidence of subdued global demand, coffee is in good position to turn back up. The smaller crop from Brazil and the outlook for improving demand are factors which could support. Vietnam coffee exports in December jumped 66% from November to reach 139,046 tons.
March cotton closed sharply higher and at new contract highs on Tuesday after the USDA lowered US cotton production and ending stocks sharply in the monthly supply/demand report. The move took the nearby contract to its highest level since September 2018. The dollar was sharply lower, and this was supportive to cotton as well.
Although the longer-term demand outlook remains positive while key outside markets may continue to provide carryover support, sugar remains vulnerable to long liquidation. Sugar receive a significant boost from crude oil prices which reached a 1-year high, as well as from the Brazilian currency which regained more than 2% in value.
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