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Surging Energy Prices Support Cotton Demand


While cocoa was unable to avoid a tenth negative daily result over the past 12 sessions, the market was able to find support near the late December/early January lows. Global demand concerns may continue to be a source of pressure, but cocoa prices are showing early signs that they are closing in on a near-term low.


For the second time in three sessions, coffee prices have followed a sharp selloff with a recovery move. While the market remains vulnerable to additional long liquidation, coffee should be closing in on a near-term low. Indications that Russia’s invasion of Ukraine could disrupt shipments of fertilizers to Brazil provided a boost to coffee prices, as they provide 69% of Brazil’s fertilizer imports.


May cotton closed sharply higher on the session yesterday after breaking out of a two-day consolidation and trading to its highest level since Thursday when it put in an outside reversal lower. Corn, wheat, and crude oil all traded sharply higher off the Russia/Ukraine war, and this lent support to cotton as well.


Following last week’s failure, sugar prices have again broken out of their recent consolidation zone to the upside. While near-term demand remains uncertain, sugar is in a better position to extend a recovery move. Huge rallies up to multi-year highs in both crude oil and RBOB gasoline provided carryover support to the sugar market as they should help to strengthen ethanol demand in Brazil and India.

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