Strong Demand Continues to Support Cotton
While there is a positive longer-term outlook, cocoa’s abrupt change in fortune underscores the market’s near-term demand concerns. Although there are bullish supply developments that can provide support, cocoa is likely to see further downside price action before the market can find a near-term floor.
A bullish longer-term outlook helped coffee to finish 2020 more than 23.00 cents (or 22%) above its early November lows. With a negative shift in global risk sentiment adding pressure, a reminder of bearish near-term factors from both the supply and demand sides of the market has put coffee back on the defensive this week.
March cotton closed sharply higher yesterday but well off its high of the day. The market reached a new contract high during the session, taking out the previous contract high from July 2018. The nearby contract traded to its highest level since December 2018.
Sugar was able to extend its winning streak to 9 sessions as an improving longer-term demand outlook continues to provide underlying support. March sugar started the new trading year with a gap-higher opening and reached the highest level since May 2017.
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