Sugar Reaches Multi-Year High
Cocoa prices will start today more than 70 points above all of its 3 major moving averages, the highest that it has been since mid-May. With the market focusing on a positive longer-term demand outlook, cocoa is finding additional support from recent supply-side developments that can help the market climb further to the upside.
If improving global risk sentiment can help to soothe near-term demand concerns, coffee should be able to extend this week’s recovery move. Indications by Brazil’s government that last month’s frost event may have reduced their nation’s 2022/23 coffee production by as much as 10 million bags continues to underpin prices, as that would be more than 20% of Brazil’s Arabica production and more than 10% of total global Arabica production during the past 2 Brazilian “on-year” seasons.
The cotton market remains in a steep uptrend with December cotton moving to a new contract high and nearby futures rose up to the highest price level since June 2018. Open interest is high and technical indicators are extremely overbought. However, traders are anticipating strong demand for consumers to buy textiles as the global economy reopens.
Sugar prices exploded to the upside yesterday and reached a new multi-year high and finished with a massive gain and pushed to the highest level in more than four years. The Unica supply report for the second half of July showed that Center-South sugar production fell 11% from last year’s total to 3 million tonnes.
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