Cotton Remains in Consolidation
While cocoa prices have fallen well into “bargain” territory, they have shown few signs of finding their footing following a rough start to November. The market is approaching price levels seen earlier this year when the end of COVID restrictions was still well into the future, which indicates cocoa may not have much more downside left to go before it posts a low.
Coffee prices have been unable to break out of a volatile coiling pattern since the beginning of August, even though the market has risen more than 16% in value over that timeframe. Improving global demand and bullish supply development continue to point towards higher price levels, so coffee should still remain well supported on near-term pullbacks.
March cotton closed moderately higher on the session Friday. Cotton prices in Punjab, India have soared in the wake reports of severe damage to the crop from pink bollworm. The price reached 10,500 rupees per quintal, the first time it climbed over 10,000 and 77% above the government support price. For the USDA baseline projections for the 2022 crop, the USDA preliminary estimate shows 12 million acres planted from 11.1 million this year. For the USDA supply/demand report on Tuesday, the trade does not appear to expect many changes from the October report.
Sugar prices have been able to maintain a recovery move over the past few weeks in spite of extreme volatility in its key outside markets. With the market continuing to receive bullish supply developments from Brazil, sugar can maintain upside momentum. For the week, March sugar finished with a gain of 67 ticks (up 3.5%) and a second positive weekly result in a row.
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