The market has found significant support from outside market forces recently, and the hot and dry weather in West Texas has added to the positive tone. The surge in the stock market and decent export news has added to the positive tone. Unless there is significant damage to the Delta crop, the weather this week looks mixed. The COT report shows a hefty net long position so it will be important to see positive news to extend the recent rally.
Cocoa continues to face pressure from global demand concerns that will not be fully soothed until most areas of the world has ended or sharply reduced their coronavirus restrictions. Improving global risk sentiment was able to fuel a significant turnaround Friday, however, and that may help the cocoa market to regain lost ground.
Although the market will start out this week well below the early August highs, coffee should be able to maintain an upside bias. December coffee was able to shake off heavy early losses Friday as it went on to post a moderate gain and for the week, December coffee finished with a gain of 3.35 cents (up 2.9%) which broke a 2-week losing streak.
With an overbought condition basis the COT report, and the outlook for big supply ahead, the market could see a turn lower at any time. China sugar imports for July reached just 310,000 tons, down 30% from last year. Cumulative imports for the year reached 1.56 million tons, up 4% from last year’s pace. For the week, October sugar finished with a loss of 27 ticks (down 2.1%) which broke a 3-week winning streak.
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