Drier Weather in Brazil Boosts Sugar
Although it has found fresh carryover support to underpin price, sugar remains highly vulnerable to a wave of long liquidation if support levels are violated. Updated forecasts have dialed back daily rainfall amounts for Brazil’s Center-South cane-growing regions next week, and that gave a boost to sugar prices. Drier than expected conditions are expected to cut back on cane output and sugar production over the rest of the 2020/21 season but keep in mind that April/September Center-South sugar production was over 10 million tonnes ahead of last season’s pace.
March cocoa remains in a short-term uptrend and a close above 2469 will be seen as a positive technical development. A shift in focus towards near-term supply issues has resulted in a sizable recovery move this week.
The outside day and higher close for December coffee is a technical sign that a short-term low may be in place. The market rebounded from a new 3-month low to finish higher yesterday. Reports of additional heavy rainfall over Vietnam’s major coffee-growing areas have increased the chances of flash flooding that could damage coffee trees and delay the upcoming harvest.
The cotton market remains in a short-term uptrend but looks vulnerable to at least a technical correction over the near term. The 1-5 day weather forecast does not show much rain for key growing areas but the 6-10 day outlook calls for above normal precipitation which raises concerns about harvest progress and quality.
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