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Cotton Priced-in Bullish Global Demand


Following a mild 2-day rebound, the cocoa market has fallen back on the defensive as it has lost over 9% in value (down 244 points) from its January 19th high. With bullish supply developments and an improving global demand outlook, cocoa is well into bargain price territory now and should be closing in on a near-term low.


Coffee continues to see choppy price action as it continues to have trouble sustaining upside momentum since reaching a multi-year high in early December. Reports that Vietnam’s harvest is nearly complete weighed on the coffee market as there may be a rush to market newly harvested supply before the Tet/Lunar New Year holiday.


March cotton closed slightly lower yesterday after spending the day inside Wednesday’s range. The dollar was sharply higher, with the nearby Dollar Index breaking above its November highs and trading to its highest level since June 2020, which is negative to US export commodities like cotton. The stock market and crude oil were lower, which was also negative for cotton.


While sugar prices extended their losing streak to 6 sessions, the market remains well clear of its early January lows. If global risk sentiment and key outside markets have significant improvement during today’s action, sugar may stabilize. Rain in the forecast for Brazil’s Center-South cane-growing region was a notable source of pressure on sugar prices as that should benefit their upcoming 2022/23 cane crop.

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