Sugar Gives Back Most Gains
Cocoa continues to face demand issues in many regions of the world, but there are signs that the current supply issues may provide additional support going into the final weeks of the 2021/22 season. As global risk sentiment improves, cocoa may be in position to trend higher. West African growing nations are likely to see this season’s production issues continue into the upcoming 2022/23 season, and that continues to provide underlying support to the cocoa market.
Coffee prices have been weighed down by concern over out-of-home consumption, and now have been pressured by bearish supply news. While global risk sentiment appears to have taken a positive shift, coffee is on the defensive and has closed lower for the 4th session in a row. The potential for a sharp increase in ICE exchange coffee stocks continues to be a major source of pressure.
The cotton market appears to be consolidating its gains of the past four weeks, particularly the sharp rally in the wake of the bullish USDA report last Friday. The market left a few gaps on the way up, which it can go back and fill and still maintain a positive trend. A sharp rally in the dollar on Thursday also pressured cotton. The weekly export sales report was unimpressive, and US traders are noting competition from Brazil.
Sugar prices have given back most of the August gains and are on-track for a negative weekly reversal. Unless it can receive carryover support from key outside markets, sugar prices may slide further to the downside. China’s July sugar imports came in more than 35% below last year’s level, which has put their 2022 import total 17% behind last year’s pace. This weighed on sugar prices as that indicates weaker demand from one of the world’s largest sugar importing nations.
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