Good Weather, Weak Demand for Cocoa
While there was a rebound in global risk sentiment and strength in key outside markets, cocoa has found little benefit as demand concerns continue to shadow the market. Cocoa is a very demand sensitive market. Until the market can receive bullish supply/demand news, cocoa prices are likely to extend the current pullback. There were reports of fresh coronavirus restrictions in Europe and the US that cast further doubt on Halloween activities in those regions.
Coffee continues to have trouble sustaining upside momentum as the market saw little upside follow-through from last Friday’s positive daily reversal. While this points towards further downside price action, coffee should be able to find its footing soon.
The market managed an upside breakout above the September high but failed to find much in the way of new buying interest. December cotton traded to its highest level since February on concerns about another tropical storm heading into the Gulf of Mexico, but by the end of the session it had given up most of its gains.
While this season’s global supply outlook remains bearish, there have been several bullish supply-side developments that have kept sugar prices in close proximity to a new 7-month high. Carryover support from key outside markets has also played a key role in sugar’s recovery move, and those markets will need to continue a positive tone for sugar to avoid a near-term pullback.
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