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Slower Economy May Slow Demand


December Cocoa experienced a key weekly reversal last week after posting a contract high on Wednesday. With the possibility of a Covid-related setback in demand, and continued strong production news, the market appears poised for a further decline. For the week, December cocoa finished with a loss of 53 points (down 2.0%) which broke a 3-week winning streak.


Coffee’s 16.00 cent trading range during August so far is a fraction of its whipsaw action during the second half of July. A bullish supply outlook continues to underpin the market. For the week, December coffee finished with a loss of 4.25 cents (down 2.3%) and a third negative weekly result over the past 4 weeks.


December cotton fell to its lowest level since August 12 on Friday but recovered to closed higher on the day and the market bounced overnight. Still, it was the first weekly decline in a month. The dollar turned lower on the session Friday after trading to a new high for the move, and this lent support to cotton.


While the sugar market is extremely overbought technically, the supply fundamentals continue to show a bullish tilt. The worst drought in 50 years and recent frost damage in Brazil’s Central-South region could keep sugar’s supply outlook on a bullish track going forward.

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