Written Commentary
COCOA
While the market received evidence that second quarter demand was stronger than expected, the near-term outlook remains subdued which kept cocoa prices on the defensive last week. Although it has fallen back into “bargain” price territory, cocoa could see downside follow-through early this week.
COFFEE
After a sluggish start to the month, coffee prices have regained upside momentum and are within striking distance of the early July highs. While the global supply outlook remains bullish, this current upsurge has been fueled by near-term weather concerns which will either be soothed or given more strength by the middle of this week.
COTTON
December cotton closed higher on Friday and near its high of the day after trading a few ticks above Wednesday’s contract high. Friday’s close was just shy of that high. Some traders are acknowledging how strong this year’s crop looks but see strong demand as well. Others think we are near the top unless there is a turn for the worse in the weather. Recent rains have all but eliminated any threat to the cotton crop in west Texas.
SUGAR
Sugar’s change in fortune late last week may be fueled in part by fresh Brazilian weather concerns that could evaporate quickly early this week. If global risk sentiment recovers and boost key outside markets, however, sugar would be able to maintain upside momentum and head towards a retest of the early July highs.
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