Cotton Getting Oversold
Cocoa’s demand concerns remain the front-and-center issue for the market with prices more than 230 points (down 8.7%) below their March high. Although it is receiving little help from global risk sentiment or key outside markets, cocoa may find its footing soon.
Coffee prices have been unable to find their footing over the past week as they continue to be weakened by near-term demand concerns. While demand may remain subdued over the next few weeks, a bullish supply outlook could help the market find a floor.
May cotton broke below its March 10 low yesterday to trade to its lowest level since February 3. The dollar was stronger, with the June Dollar Index trading to its highest level since November 23, and this as viewed as negative for US cotton exports. The trade is also that the renewed lockdowns in Europe due to Covid will hurt cotton sales.
Although carryover support from key outside markets will continue to be a major factor in near-term direction, sugar is also receiving bullish supply/demand developments to provide additional support.
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