Bearish Supply Outlook for Sugar
While it has received carryover support from its key outside markets, sugar continues to have a bearish near-term supply outlook that leaves the market vulnerable to additional long liquidation. Stronger energy prices were a key source of carryover support for the sugar market as that bolsters recent signs that Brazilian domestic ethanol demand is on the mend.
European shares are under significant pressure this morning, and cocoa has been also been weighed down by a moderate pullback in the Eurocurrency. Today’s critical third quarter European grindings release came in at 345,730 tonnes, which was 4.7% lower than the 2019 reading of 362,940 tonnes.
There is rain the forecast for Brazil’s major Arabica growing regions this week, and that weighed on coffee prices as it should provide some relief from extensive dry conditions earlier this year. A mild pullback in the Brazilian currency also pressured coffee prices as that could lead to more aggressive marketing of Brazilian near-term coffee supplies.
There is still no technical sign of a peak and the weekly conditions report did not give the market much in the way of new news for the impact on the crop from the hurricane. Too much rain for the India and US crops are a key supportive force. December cotton closed slightly higher yesterday but did not take out Monday’s 8-month high.
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