Overbought But Uptrend Continues In Cotton
While global fourth quarter demand may not have been as sluggish as the market feared, cocoa will continue to face near-term demand concerns while rising COVID case counts keep shutdown measures firmly in place. The longer-term demand outlook appears to be much more positive, however, and that should help to underpin cocoa prices.
While demand will remain subdued through the first quarter, coffee has recent bullish supply developments which may support. Global demand prospects continued to be weakened with rising COVID case counts, and that remains a source of pressure on the coffee market as restaurant and retail shop consumption will remain fairly low.
It feels like a delayed reaction but the surge higher to new all-time highs for the stock market yesterday helped drive cotton to new contract highs today. The upside seems somewhat limited, especially if demand concerns develop from China.
Sugar prices have found near-term footing as they benefited from carryover support in key outside markets. While there have been bullish supply developments and a positive turnaround in demand, sugar has been unable to retest last week’s multi-year high and is showing some early signs of being top-heavy at current prices levels.
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