Coffee Extends Move Higher
Coffee futures to extend a recovery move.
The market seems to have put in a short-term low near the 50% mark of the June-August rally. It may see a resumption of the uptrend soon. Global demand has been on the mend over the past few weeks. European demand has improved from reduced coronavirus restrictions, and that bodes well for North American demand when coronavirus restrictions are lifted in the US and Canada.
Cocoa prices have benefited from a positive turnaround in global risk sentiment that can help to soothe concerns with near-term demand prospects. A sizable rally in the Eurocurrency provided cocoa with critical carryover support as strength in that currency will make it easier for Euro zone grinders to acquire near-term supply.
USDA report news a bearish surprise; world demand down. The market may try to bounce with the grains, but the USDA report was a disappointment for the bulls. The outside-day and sharply lower close for December cotton is a bearish technical development. US cotton production for 2020/21 was revised upward to 18.08 million bales from 17.50 million in July.
Sugar prices overbought and in position for correction; 12.34 support. After finishing July with an upside breakout, sugar has spent the early part of August in a coiling price pattern. It has been unable to fully benefit from improving global risk sentiment. A bearish global supply outlook continues to weigh on sugar prices who need additional carryover support from key outside market to avoid a near-term pullback.
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