Global Production Deficit Supports Coffee
While cocoa has been unable to sustain a recovery move following the mid-December spike low, the front-month March contract has found decent support just below the 2500 level over the past few weeks. While the market will continue to face near-term demand concerns through the rest of this month, cocoa is showing early signs that the mid-December spike low may prove to be a longer-term low.
Coffee has extended its recent whipsaw price action into the new trading year with more than a 7.00 cent trading range during the first 2 sessions of 2021. The 3 spike lows since mid-December have an ascending pattern, however, which may be an early sign that those lows will hold during the early part of January.
The market remains in a strong uptrend as aggressive buying from global money managers for commodities has helped drive the market higher. March cotton closed sharply higher on the session yesterday after trading to new contract highs for the second day in a row.
Sugar’s rally over the past 3 weeks has led to prices rising up into near-term overbought territory. As long as global risk sentiment continues to mend and key outside markets provide carryover support, sugar prices should remain fairly well supported.
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