Choppy to Lower Trade Continues For Coffee
While it continues to have a positive longer-term outlook, cocoa’s near-term demand concerns have weighed on prices. European and North American prospects may have improved, but a negative shift in the Asian outlook that put cocoa on the defensive.
The market is still probing for a near-term support zone. December coffee started the week with a gap-lower opening, and the lowest close since August 23rd. While China’s per-capita consumption remains comparatively small to other developed economies, the USDA projected their 2021/22 consumption at 4 million bags while Starbucks has over 5,000 retail shops in China.
The huge recovery from yesterday’s lows for the stock market helped to support the market overnight but major technical damage has been done. The cotton market collapsed with bearish outside market forces and major concerns of economic conditions in China helping to spark aggressive selling from speculators yesterday.
Although the sugar market is back to within striking distance of its September low, it has held up relatively well in spite of the sharp selloffs in key outside market and a severely negative tone for global risk sentiment. While it may see further downside action, sugar’s bullish supply factors should help the market find its footing.
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