Cocoa’s recovery move appears to have run out of near-term steam as it broke a 7-session winning streak on Tuesday. Cocoa has bullish supply factors and improving demand prospects that can help prices stay fairly well supported on any near-term technical correction. Improving global risk sentiment is providing cocoa with a source of support as it helps to soothe near-term global demand concerns.
While coffee demand will not return to “normal” until most areas of the globe have lifted their coronavirus restrictions, there are clear signs now that it is on the mend. With fresh bullish supply-side news to provide support, coffee prices may be heading for a retest of their late March highs.
Hot and dry weather in Texas and a weaker dollar are sending cotton prices to their highest level since early July. December cotton has yet to take out the July 9 high at 64.90, and this is a key resistance level as it was the highest the market had been since March 5th, which was just as the implications of the coronavirus was beginning to dawn on the markets.
Sugar prices have been resilient in the face of projections for a very large 2020/21 global production surplus. While key outside markets are providing carryover support, sugar will need to see bullish supply/demand developments to see a large extension to this current breakout move.
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