Sharp Rally in Sugar
While cocoa continues to face pressure from near-term global demand issues, the market has rejected several downside breakout moves since mid-December. With a much more positive demand outlook for the second half of this year and beyond, cocoa may be in a position to extend a recovery move.
While coffee’s post-holiday rally ran out of steam, the market has once again climbed back to the upper portion of its recent consolidation zone. With demand showing some early signs of improvement as the market prepares for a sharp drop in Brazilian production, coffee may regain upside momentum and retest the mid-January high before the end of February.
March cotton closed higher for the sixth session in a row on Friday and the market surged to new highs overnight even with weakness in equity markets. It has made new contract highs in five of the past six sessions.
Sugar prices have rallied to their highest levels in nearly 4 years with the front-month contracts in backwardation, but the March/May spread has been unable to retest its 1.09 cent from early November since the start of the year.
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