Upside Momentum in Coffee Continues
Cocoa’s upsurge this week was initially triggered by a positive change in its global demand outlook. With fresh bullish supply news adding further strength, the uptrend may continue. Ghana’s official purchases this season through October 29th came in at 116,141 tonnes which was down 9.6% from last year’s comparable total.
While it lost some strength on Tuesday, coffee has maintained upside momentum since early November. With the global demand outlook set to improve by next year, coffee should be able to hold its ground. Hurricane Iota was downgraded to a Tropical Storm on Tuesday, but it made landfall over Nicaragua 15 miles from where Hurricane Eta made landfall earlier this month and has closely tracked its path since then.
The market inched lower in quiet trade yesterday, but the market is staying near the upper end of the recent trading range. Weaker oil prices also pressure cotton because they lower the cost of synthetic fibers. As of Sunday, the cotton harvest was 69% complete, which was right at the 10-year average.
Since the start of the fourth quarter, sugar prices have had four pullbacks from a new high for the move, the last two being 110 ticks (October 27th to 30th ) and 96 ticks (November 3rd to 6th) in size. The market continues to hold onto a very large net spec long position that will provide plenty of fuel for long liquidation.
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