September 1st, 2010
$KC_F $CT_F $SB_F
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The October No. 11 contract reached 20.05 ¢ in early trading, marking the ninth consecutive day the October contract has made a high above 20 ¢. The October’s trading range over that time is 19.09 ¢ to20.37 ¢ with frequent and sharp price swings. The Brazilian sugar lineup fell from 114 ships last week to106 this week; this is more ships that usual waiting to load sugar which indicates that demand still exists in the sugar market which should provide some support to the sugar market. Brazilian sugar export data should come out in a few days and show record or near-record monthly exports, which is again a sign of demand as well as available Brazilian supplies. Near-term downside price target is the 19.09 ¢ low set on the 24th while technicals suggest the high could be up to 21 ¢, although additional bullish news or very supportive outside markets will be required to get to that point.
Cocoa futures were down after the market’s small rally ahead of September’s expiration. A report yesterday in which a Ghanaian government official predicted that their new-crop cocoa production would reach one million tonnes could not pressure the futures market yesterday as the number seemed somewhat beyond belief. However, with the widespread smuggling in the region, there is great degree of uncertainty regarding any production estimates. Speaking in general terms, the market continues to trade on the expectation of a good West African crop, and the global macroeconomic uncertainty casts some doubt as to whether the cocoa grind can continue its strong rebound.
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