Sluggish Demand for Coffee
Coffee prices are more than 30.00 cents below their early September highs (down 22.5%) as the market has priced-in a near-record Brazilian 2020/21 crop and sizable Brazilian 2020/21 exports. With a negative shift in demand starting to develop again, coffee is likely to remain on the defensive.
Cocoa continues to face concern with global demand prospects for the fourth quarter that have more than offset carryover support from its key outside markets. With fresh bullish supply developments providing support, however, cocoa should be able to hold its ground above last week’s lows.
The lower close for December cotton after trading up to the highest level since January 23rd is a bearish technical development and might spark some profit-taking selling. Slow stochastic readings are near 84 and 88 with relative strength at 87, and this points to an extreme overbought condition.
Sugar prices remain on-track for their sixth monthly gain in a row, but are starting to look top-heavy as they approach the 2020 highs from mid-February. Unless they are able to find fresh supply/demand support, sugar could see a long liquidation correction.
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