Sugar Rally Continues
As with the first two times it occurred this month, sugar prices followed Wednesday’s negative key reversal by quickly regaining upside momentum. While the market is technically overbought and at 11-year highs, there are few signs that sugar’s rally will slow down. A rebound in the Brazilian currency provided sugar with early carryover support as that may encourage Center-South mills to shift some of their crushing away from sugar production. Indications that India will not allow further exports this season also fueled sugar’s rally as several major importing nations are having supply issues. Lower domestic output will make China a more aggressive sugar importer at the same time that Philippines will need to import more sugar due to their own production issues.
Cocoa is now into the sixth month of a longer-term recovery move due in part to an improving demand outlook. With the market still on-track for a weekly gain and close to 6 1/2 year highs, bearish supply news late Thursday could lead to cocoa prices having a downbeat finish to the week. Ideas that West African growing nations will find relief from tight near-term supplies as their mid-crop harvest reaches full speed weighed on cocoa prices which fueled profit-taking and long liquidation.
After showing signs of being top-heavy at 6-month highs, it did not take much for coffee prices to fall back on the defensive. With the market within striking distance of a negative weekly reversal, coffee prices could slide further to the downside. Concern over near-term demand prospects were fueled by a negative shift in global risk sentiment, and that became a significant source of pressure on the coffee market. Ideas that Brazil’s upcoming 2023/24 crop will exceed last year’s output also pressured coffee prices as their Arabica harvest will begin next month.
July cotton collapsed yesterday, falling to limit down at one point (-4.00) before closing 3.56 lower for the day. The market fell to its lowest level since March 27. The weekly export sales report was disappointing, as it showed US cotton export sales for the week ending April 13 at 62,080 bales for the 2022/23 (current) marketing year and 38,007 for 2023/24 for a total of 100,087. China has the most commitments for 2022/23 at 2.602 million bales, followed by Vietnam at 2.020 million. Cotton may have also been pressured by steep declines in wheat and corn after it was reported that vessel inspections were resuming for Ukrainian grain shipments though the Black Sea. Also pressuring cotton was a sharp break in crude oil prices to their lowest level since March 13.
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