Correction in Sugar
The market has been unable to benefit from significant carryover support from outside markets, and that may be setting sugar up for a correction. October sugar closed 17 points lower for Friday’s session after a higher opening, which left the market down 23 points for the week for a second negative weekly result in a row. Sugar “should” have received a significant boost from a more than 3% gain in the Brazilian currency that eases pressure on Center-South mills to favor sugar production over ethanol production, while energy prices were relatively stable going into the weekend.
Cocoa’s 2-day updraft has lifted prices well above the early August consolidation and far above their 3 major moving averages. While the market is near-term overbought, cocoa has found support from both the supply and demand sides of the market that should help it to remain well supported on any near-term pullbacks. December cocoa pushed up to the highest level since February 28th.
With the Brazilian harvest nearly completed and their crop priced-into the market, coffee should benefit from Central American supply issues and improving global demand prospects. December coffee closed sharply higher for Friday’s trading session as the buying pushed the market up to the highest close since March 25th. The market ended 655 points higher for the week which was a second positive weekly result in a row.
The drift lower for December cotton since the hurricanes hit could be a sign that hurricane damage has already been priced. The market found some selling pressure in reaction to the Hurricane largely missing cotton growing areas when it rolled through last week. The market was well supported last week by anticipation of the storms but also by optimism regarding US export prospects after China and the US reported a successful meeting regarding the Phase 1 trade agreement. However, the USDA is forecasting a strong US crop for 2020/21 and large US and world ending stocks, so the market may find it difficult to build on the current uptrend.
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