Tiny Bounce in Cotton
Cocoa prices continue to face headwinds from global demand concerns that will continue until most COVID restriction are relaxed. While there are concerns with upcoming production, record high cocoa output this season has also weighed on the cocoa market. Stronger European and US equity markets as well as sizable rebounds in both the Eurocurrency and British Pound provided cocoa prices with early carryover support yesterday.
Coffee has spent most of August seeing coiling price action and has been unable to recover most of its late July losses. The market continues to hold above its early August lows, and has bullish supply developments that are providing underlying support.
The cotton market could only muster a very tiny bounce yesterday which is a negative development given the surge in outside market forces. A sharp rally in crude oil, the run to new all-time highs for the stock market and a very sharp break in the US dollar were all seen as positive forces for cotton.
Sugar continues to hold its ground near last week’s multi-year highs as recent Brazilian supply developments continue to underpin prices. With clear improvement in key outside markets, sugar should remain fairly well supported on a near-term pullback.
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