Weak Q4 Demand in Cocoa
While global demand is expected to improve if and when COVID vaccines receive widespread distribution, near-term demand prospects continue to weigh heavily on the cocoa market. With bearish near-term supply news adding further pressure, cocoa could see more downside price action before the market can find its footing.
Over the past 2 weeks, coffee prices have seen whipsaw price action that has left the market unable to retest its mid-December highs. Coffee continues to find support on near-term pullbacks, however as near-term supply issues, a sharp drop with upcoming Brazilian production and a positive longer-term demand outlook continue to underpin prices.
March cotton remains in a short-term uptrend and it is fast approaching the December 18th, 2 1/2 year highs. The dollar was lower, and it is approaching its December 14th low, which was the lowest it had been since April 2018, and the stock indices are just below all-time highs, so two key outside market influences are supportive as well.
An improving demand outlook going into 2021 has put the sugar market within striking distance of 5-week highs. With carryover support from its key outside markets, sugar can maintain upside momentum. March sugar continued to extend its recovery move and closed higher for the sixth session in a row.
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