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Drought Persists in West TX


Since matching a 4-month low last Tuesday, cocoa prices have not posted a negative daily result and have risen 126 points in value. If bullish supply factors are matched by a rebound in near-term demand prospects, cocoa could see a significant extension of its current recovery move. Cocoa was able to maintain upside momentum in spite of weaker European equity markets and sharp selloffs in the British Pound and Eurocurrency which were sources of carryover pressure.


Coffee prices have been unable to put together 3 positive daily results in a row since the start of April. The market continues to hold its ground above the mid-March lows, however, and has been receiving some supportive news that can underpin prices. A more than 1% decline in the Brazilian currency was a source of carryover pressure on the coffee market. Vietnam’s 2022 coffee exports through the end of April are running 28.4% ahead of last season’s pace, which was another source of pressure on the coffee market early this week.


July cotton pushed to a new contract high this morning and closed sharply higher on Monday after trading to new contract highs for the third session in a row. December cotton also posted contract highs for the 4th session in a row this morning. Outside market forces were mixed, with a higher dollar being negative to cotton, and slightly higher equity and crude oil markets supportive. Traders are still reported strong mill demand, and concerns persist about the drought situation in west Texas.


Sugar prices are more than 1.50 cents below their mid-April high and have been unable to put together back-to-back positive daily results in over 2 1/2 weeks. Although the market remains vulnerable to further downside action, improving ethanol demand should have sugar closing in on a near-term low. July sugar reached a new 6 1/2 week low yesterday.

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