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No Sign of Lows in Coffee


Coffee prices are experiencing a subdued finish to the third quarter. The market is in a short-term oversold condition and is probing for a low. Reports that Brazilian warehouses are full as their 2020/21 harvest draws to a close continue to weigh on the market. This has offset any carryover support from a modest recovery in the Brazilian currency from a four-month low.


As the new season starts in West Africa, there are near term bearish supply concerns that could pressure the market. December cocoa has been weighed down by global demand concerns since it reached its early September highs, so it was little surprise that the negative shift in global risk sentiment put the market on the defensive.


The market has been consolidating for the past two weeks. The dollar broke lower for the second day in a row, which offers some support to cotton, but the stock markets were lower as well. There could be some harvest pressure developing as the southeastern US and Delta regions dry out this week.


Given its bearish global supply outlook, the sugar market has been surprisingly resilient, as it is on track to post a fifth monthly gain and a second quarterly gain in a row. The market has built up a sizable spec net long position and is approaching near-term overbought levels, so it will need continued carryover support from key outside markets to stay in a slow uptrend.


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