Sugar Trending Higher
Sugar prices have now retraced last week’s downside breakout and back into the early June consolidation zone. While key outside markets are positive, a bearish global supply outlook may put some brakes on this week’s upside move. A more than 2.5% gain in the Brazilian currency provided sugar with underlying support as an extended recovery in their currency will ease pressure on Brazil’s Center-South mills to produce sugar for export.
Cocoa prices have started the third quarter by extending their pullback to a new 2020 low. While a rebound in US stock markets and the Eurocurrency provided support, that was unable to put any brakes on cocoa’s more than 200 point decline since late last week. Increasing coronavirus cases in several US states are likely to keep North American demand subdued during the third quarter as paused reopenings will keep stores from reopening and airplane travel well below capacity.
Since their December/February pullback of over 40.00 cents and over 29% in value, coffee prices have made several unsuccessful attempts to sustain a recovery move. While additional short-covering has played a part in this week’s rally, coffee is showing signs that it can extend this rebound.
December cotton remains in a steep uptrend and has already pushed past the 50% mark of the January 13 to April 2 break. The market broke out above its June 8th high and traded to its highest level since March 11. Tuesday’s USDA Acreage report put cotton planted area at 12.2 million acres, down from their previous estimate of 13.7 million. Assuming no change in the yield estimate, this would put US ending stocks at 5.77 million pounds, down from 8.00 million estimated previously and 7.30 million for 2019/20.
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