Better Demand Tone For Cocoa
Cocoa prices will continue to face demand concerns through the third quarter, but this year’s quarterly grindings from the 3 major regions have avoided shockingly bad results. Global risk sentiment appears to be on the mend in spite of increasing coronavirus cases in the US and other developed economies, and that could help cocoa prices to maintain upside momentum.
Coffee continues to have a difficult time sustaining upside momentum as it failed to post a second straight close above its 50-day moving average, which the market failed to achieve since mid-April. While global demand prospects remain a concern, the market continues to receive supportive supply news that can help coffee prices hold their ground above last week’s lows.
December cotton experienced a sweeping reversal after falling to the lowest level since July 1 to close higher on the day. The market appears set for a resumption of the uptrend after correcting the overbought condition off of the July 9 peak. With a positive tilt to outside market forces, a weak US dollar and a strong US stock market, the short-term demand tone has improved.
While sugar prices are finding carryover support from key outside markets and a mild rebound in global risk sentiment, that has not been enough to overcome a bearish global supply outlook. Prospects for a sizable production increase by the world’s top 2 producing nations (Brazil and India) continue to weigh on sugar prices as it should result in a very large global production surplus. Brazil and India should also see a sizable uptick in their 2020/21 exports as well, and that should help to offset a second season with relatively low exports from Thailand.
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