Volatile Price Action in Cocoa
Cocoa prices continue to see volatile price action, but they are staying clear of Monday’s 4 1/2 month low for two sessions in a row. With the market able to do that in spite of ongoing concern with European demand could be an early sign that cocoa has found a better support level.
With a bullish supply outlook, coffee remains in position to turn higher. An early rally to a 2-week high in the Brazilian currency provided coffee with carryover support, but then had a negative turnaround which pressured the coffee market late in the day.
The cotton market seems to have the short-term fundamentals to move higher but uncertainty on politics and China demand are forces which could limit buying and spark more selling. The June dollar index recovered after probing to its lowest level since March 23. Traders have concerns about the ongoing drought conditions in west Texas.
Consistent carryover support from its key outside markets has been difficult to sustain. There have been recent bullish supply/demand developments which are helping to underpin prices, however, and that should help sugar to remain well supported on pullbacks.
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