Wet Weather Delays in Cotton
The market remains in a short-term consolidation period and the technical action improved with the rally on Friday. Open interest remains very high and it will take reports of significant damage to the cotton crop in order to expect a resumption of the uptrend. There have been significant flooding issues with bolls open, and we cannot rule out a resumption of the uptrend with 67.80 as next upside target for December cotton. There are concerns that the wet weather in the southeast is delaying the harvest, not necessarily damaging the crop.
With global demand concerns a front and center issue, cocoa prices have been weighed down by a generally negative tone from its key outside markets. As the 2020/21 season starts later this week, however, several bullish near-term supply developments may help the cocoa market hold its ground.
Coffee prices remain well below their early September highs, but they appear to have turned a corner after last week’s late recovery that came in spite of a record high Brazilian crop. December coffee finished with a small weekly gain last week.
Sugar remains on-track for a fifth monthly gain in a row and second quarterly gain in a row in spite of a bearish 2020/21 global supply outlook. This has resulted in a sizable build-up in sugar’s net spec long position, so sugar will need to receive sizable carryover support from its key outside markets to avoid long liquidation.
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