Supply Uncertainties Build
Cocoa prices have rebounded back into the middle area of their late August/September trading range, as supportive supply-side news has added to gradual improvement in the demand outlook. While it may face headwinds from the ebb and flow of global risk sentiment, cocoa may be able to put together a longer-term recovery move during the fourth quarter.
Coffee has an improving global demand outlook at the same time that there are supply bottlenecks developing in several parts of the world. While the market may have trouble shaking off its choppy pattern that has development since mid-July, coffee looks to be heading for higher price levels during the fourth quarter.
December cotton has coiled up in a tightening consolidation pattern. Equity markets were higher yesterday, with the Dow and S&P 500 both trading to new contract highs and this is supporting economically sensitive markets like cotton. The weekly crop progress report showed 35% of the US cotton crop was harvested as of Sunday, up from 28% the previous week but down from a 10-year average of 40%.
Sugar prices were able to benefit from strength in key outside markets. With bullish developments in Brazil providing additional support, sugar can extend this recovery move. Both crude oil and RBOB gasoline reached new multi-year highs provided an early boost to sugar prices.
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