Short Cover Bounce in Sugar
Sugar prices look to have broken out of their recent consolidation zone and are on-course for a sizable weekly gain and while there have been some bullish supply/demand developments, it continues to also find carryover support from its key outside markets. If that starts to fade, however, sugar’s upside move may run out of near-term steam. Sugar found considerable carryover support from sharp gains in crude oil and gasoline prices which may help to shore up Brazilian domestic ethanol demand prospects.
Cocoa’s whipsaw price action this week has resulted in the last 3 sessions having an average daily trading range 111 points (4.3% of Tuesday’s closing price). In spite of this severe volatility and ongoing global demand concerns, cocoa remains on track for a weekly gain and could benefit from improving global risk sentiment. Cocoa found some measure of support from a rally in the Eurocurrency as it rebounded from a 5-week low which can help to lift near-term demand prospects from a region that accounts for one-third of all global cocoa processing without any domestic source of cocoa beans.
While coffee has not had a positive daily result this week so far, the market avoided its first close below the 50-day moving average since mid-July. Reports that Brazilian warehouses are nearly full as their 2020/21 “on-year” harvest is nearly complete weighed on prices as that may help to soothe near-term supply concerns due to a slow harvest and labor availability issues.
As the hurricane rains move across the cotton belt, December cotton closed lower for the third session in a row. Concerns about damage from Hurricane Sally eased as the storm moved inward. Apparently traders expect some damage near the coast, but not in the interior. US cotton export sales for the week ending September 10 came in at 519,604 bales, all for the 2020/21 (current) marketing year. This was up from 197,071 the previous week and was the highest weekly total since May 28.
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