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Positive Weekly Reversal For Coffee


While the cocoa market has started this year on the defensive, it appears to have to found decent chart support around the mid-December lows. If and when global risk sentiment turns positive, cocoa prices should be able to regain lost ground.


The coffee market is well clear of Monday’s 7-week low and on-course for starting the new trading year with a positive weekly reversal. Although the market remains vulnerable to commodity index fund rebalancing, bullish supply factors should help coffee remain well supported on near-term pullbacks. A negative shift in global risk sentiment may have put some brakes on coffee’s recovery move as that may impact near-term demand prospects, while near-record high readings for new COVID cases will have a dampening effect on restaurant and retail shop consumption.


March cotton closed slightly lower yesterday after spending the session in the upper end of Tuesday’s range and failing to take out Tuesday’s high. The short-term trend remains up, but technical indicators are now showing overbought status. The S&P 500 was slightly higher, but not enough to excite the cotton trade.


Sugar’s coiling price pattern was setting the stage for a breakout move and while stronger energy prices provided support, it was not enough to offset bearish Asian near-term supply news. Given the prospect for a second global supply deficit in a row, however, sugar is now well into bargain price territory. With Brazil’s 2021/22 cane harvesting and crushing winding down, market focus has shifted towards Thailand and India, both of which are expected to have increased sugar production this season.

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