Cocoa Market Oversold?
Cocoa prices remain squarely on the defensive this week as near-term demand concerns remain a front-and-center issue for the market. In spite of falling 310 points below their early March highs (down 12%), cocoa remains vulnerable to additional long liquidation.
While coffee prices have several bullish supply issues to provide support, the market has been unable to get past near-term demand concerns. Although it has fallen well into bargain price territory, coffee will likely have to overcome additional long liquidation during today’s trading.
The market seems to have put in a significant low with the reversal action on Friday. If there is a surprise for the USDA report, it would likely be that corn and soybean prices are high enough to have pulled some acres away from the cotton market. The trade action Tuesday was impressive with a higher close for cotton in spite of bearish outside market forces.
In spite of falling more than 2.50 cents below its multi-year high in late February, sugar prices held up fairly well during yesterday’s wave of commodity long liquidation. Although it will take plenty of direction from its key outside markets, sugar prices may be showing early signs that they are close to a near-term low.
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