COCOA
Cocoa continues to see volatile intra-day price action. The market continues to hold its ground in spite of ongoing demand concerns, and may be on-course to finish the second quarter by lifting clear of its current price levels. Cocoa received support from gains in European and US stock markets, a sizable gain in the Eurocurrency as well as from better than expected readings from European and US “flash” PMI readings, all of which helped to soothe concerns with the demand outlook for Europe and North America.
COFFEE
While the demand outlook remains a front and center issue, improving global risk sentiment may help to soothe market concerns and help coffee maintain upside momentum. A more than 2% rally to the Brazilian currency, as well as a new 2-week high in the Colombian Peso provided coffee with underlying support, as those currency gains should ease pressure on their nation’s producers to market their near-term coffee supplies. The likelihood of a record high 2020/21 Brazilian crop continues to weigh on coffee prices.
COTTON
The short-term trend is uncertain as the cotton crop production outlook could shift quickly, depending on the weather. A statement by US Trade Advisor Peter Navarro late Monday night in the US and during the Tuesday session on Asia briefly sent prices tumbling. Navarro had stated that the US/China trade was “over,” but he quickly walked that back, and the market recovered a good portion of its losses but never made it back into positive territory.
SUGAR
Sugar finally had both of its key outside markets working in its favor, but the market failed to bounce. Although global risk sentiment is on the mend, sugar is showing more signs that it may break out of its recent consolidation zone to the downside. Expectations of sizable production increases for Brazil and India during the 2020/21 season remain a major source of pressure.
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