Softs Markets Mixed
Cocoa has a bullish supply outlook to provide underlying support, but it has been unable to overcome what many analysts see as a weak global demand. While prices are well into bargain territory, cocoa will have trouble sustaining upside momentum until demand prospects improve. For the week, September cocoa finished with a loss of 67 points (down 2.9%) which was a third negative weekly result in a row.
Coffee will start this week less than 1.50 cents away from a new contract low as the market continues to be pressured by global demand concerns and likely record high 2020/21 crop from Brazil. Prices have fallen less than 2.50 cents during June, however, which could indicate that the market’s bearish set-up has been mostly priced-in.
With a mostly hot and dry forecast for West Texas, and with this afternoon’s crop progress update likely to show the Texas crop struggling, the market may be in position to see a continued uptrend. December cotton closed just 29 points higher on Friday and 78 points higher for the week last week. This was fairly impressive action, given the weakness seen in the stock market.
Sugar remains on-track for a sizable gain for June, but has been unable to retest a monthly high posted on June 10th. While it has received recent carryover support from key outside markets, huge output increases from its top-2 producing nations will make it difficult for sugar prices to extend their second quarter upmove well above its recent consolidation zone.
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