Choppy Sugar Trade Continues
While cocoa has had a positive outlook for longer-term demand growth since the global COVID pandemic started to recede, that has also “raised the bar” in regards to digesting demand-side data results. The market will have 2 more critical data points this week, but cocoa may also need to see stronger global risk sentiment as well in order to find a near-term price floor.
Coffee’s abrupt turnaround on Wednesday may not be too surprising, as the market has seen four sizable pullbacks from a new high for the move since the start of August. Although the supply/demand outlook remains firmly bullish, coffee may be vulnerable to further technical selling.
December cotton closed sharply lower for the second session in a row yesterday, continuing its steep selloff from Friday’s contract high and key reversal. Profit taking and weak technical action have been the feature of the market over the past several sessions, which was exacerbated by the disappointing USDA report on Tuesday. The report showed US 2021/22 ending stocks tightening from previous estimates but world stocks increasing.
Sugar prices have fallen back inside the recent consolidation zone. The market continues to receive bullish supply-side developments, but may need to find fresh support from key outside markets in order to sustain upside momentum. A new low for the move in the Brazilian currency weighed on the sugar market as that may encourage Brazil’s Center-South mills to keep sugar’s share of crushing at current levels.
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