Sugar Prices Hold Below April High
Since a sharp 2-day rally to finish the first week of May, sugar prices have held within a coiling price pattern just below the late April high. With a negative shift in key outside markets along with lukewarm global risk sentiment, the sugar market remains vulnerable to a near-term pullback. A shift towards drier weather over Brazil’s Center-South cane-growing region should help with their harvesting and crushing operations, and that has put pressure on the sugar market. In addition, a pullback in the Brazilian currency may encourage Brazil’s Center-South mills to keep sugar’s share of crushing ahead of last year’s pace.
July cocoa is still under the bearish influence of the May 12th key reversal. The market has bullish supply fundamentals and strong corrective breaks are still buying opportunities. European and US equity markets, the Eurocurrency and British Pound posted mild to moderate losses, and that may have kept further cocoa price gains in check. A slow start to the region’s mid-crop harvest has led to tight near-term supplies in West Africa, and that has underpinned cocoa prices over the past few weeks.
The coffee market was unable to sustain an upside breakout of its May consolidation zone. Coffee should hold its ground above last week’s lows due to recent bullish supply/demand developments. A sizable pullback in the Brazilian currency weighed on coffee prices as that may encourage Brazil’s producers to aggressively market their coffee supplies to foreign customers. Global risk sentiment remains subdued which may weaken out-of-home demand prospects and keep pressure on coffee prices this week. Arabica prices are finding carryover support from the Robusta market, where prices reached 12-year highs due in part to very tight near-term supplies in Vietnam. Brazil’s Robusta harvest is underway, but it my be some time for that coffee to reach the global export market.
The cotton market has been on a positive track since the USDA supply/demand report was released on Friday. The report came in at the bullish end of trade expectations, with 2023/24 US ending stocks coming in at 3.30 million versus 4.18 million expected and 2022/23 ending stocks revised down to 3.50 million from 4.10 million in April. July and December cotton closed higher for the third session in a row yesterday on Tuesday. Traders will be looking to the weekly Drought Monitor on Thursday to see if there is any improvement. Rains this week could be timely for newly planted crops Indian monsoon rains are expected to be delayed slightly, which could cotton plantings. A potential El Nino event this summer could lower monsoon rainfall amounts as well.
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