Brazil Sugar Production
October sugar felt to the lowest level since July 31 this morning, and also pushed below the uptrend channel off of the April and July lows. A close below this uptrend channel will turn the charts bearish. While the market has received bullish supply developments and benefited from improving global risk sentiment, sugar has been unable to overcome huge 2020/21 Brazilian production levels.
Cocoa prices have seen 8 positive daily results over the past 9 sessions as they are more than 550 points (over 26%) above their third quarter low from early July. Improving global risk sentiment has soothed near-term demand concerns but has not fully removed them as a headwind for the market, so cocoa remains vulnerable to a correction.
The market remains in a strong uptrend. The rebound yesterday coincided with a recovery in the Brazilian currency that may ease pressure on Brazil’s producers to market their near-term supply to foreign customers. However, the International Coffee Organization update shifting the 2019/20 season from a global production deficit to a global production surplus and this remains a source of pressure on the market.
After absorbing the hurricane and declining crop conditions this week, and a surge to new all-time highs for the stock market, the lowest close since August 20 for December cotton could be a sign that a near term top is close at hand. With managed money fund traders holding the largest net long position since October 2018, selling could get more active as support levels are violated.
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