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Softs Overview for May 28


Cocoa remains in a volatile price pattern following the holiday weekend as it has been unable to fully shake global demand concerns in spite of positive outside markets. While it may have difficulty sustaining upside momentum, bullish near-term supply factors can help cocoa remain well supported. July cocoa closed well off of the highs yesterday.


While coffee continues to hold its ground above last Friday’s 3 1/2 month lows, an inability to sustain Tuesday’s recovery move indicates that demand concerns remain a front-and-center issue. Until there is some clear improvement from the demand front, coffee is likely to have difficulty sustaining upside momentum. July coffee came out of the holiday weekend with a positive tone, but fell back late in the day.


The cotton market drew early support off of a lack of rainfall in Texas over the weekend, as the trade is growing concerned about the dry conditions there. Also, weakness in Indian rupee has traders concerned about increased competition for US cotton exports. The Cotton Association of India has lowered its 2019/20 Indian production estimate to 33 million Indian bales (equivalent to 27 million running bales), down from 35.5 million previously (29 million running bales).


Sugar has received plenty of near-term carryover support from key outside markets, but has been unable to climb above last week’s highs for the move. This indicates that sugar may be a little top-heavy at current price levels, and in spite of positive global risk sentiment remains vulnerable to a near-term pullback.

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