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Rains May East Texas Drought Concern


After a 3-session/161 point downdraft, cocoa prices have found their footing before retested the early March low. If global risk sentiment continues to mend, cocoa should be able to extend a recovery move. A positive shift in global risk sentiment fueled recovery moves in European and US equity markets, both of which provided carryover support.


Coffee’s abrupt turnaround may not be surprising given the market’s bullish supply outlook combined with a nearly 50 cent decline (nearly 19% in value) from the mid-February high. A rebound in global risk sentiment provided coffee with badly-needed support as that should help to shore up near-term demand prospects which have been eroded by the Russia invasion of Ukraine and a recent build-up of warehouse coffee stocks.


May cotton is in a consolidation mode, being pulled higher by strong demand and concerns about persistent drought in west Texas but seeing some resistance with prices already at their highest levels in since 2011. The 6-10 and 8-14-day forecasts call for below normal precipitation but the 1-5 day forecast is wet. While the rain should help, the market may need to build a weather premium, and if the Ukraine war threatens global food supply, cotton may have to fight for acreage. US export sales have been decent.


Sugar has posted 3 negative daily results in a row. While it has improving ethanol demand to provide support, the market has followed crude oil prices lower. A sharp selloff in crude oil and RBOB gasoline put carryover pressure on the sugar market as that could weaken near-term ethanol demand in Brazil and India.

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