ADMIS News
COCOA
Food and energy related commodities are surging higher this morning, but economic sensitive commodities like cocoa are seeing the threat of demand destruction and this is weighing heavily on the market. Cocoa prices continue to see choppy to lower price action off of the February 10th peak. A negative shift in global risk sentiment weighed on European equity markets and the Eurocurrency yesterday, both of which were sources of carryover pressure on cocoa prices as both will weigh on European near-term demand prospects.
COFFEE
With Russia on the attack and declaring war, classic knee-jerk reactions have occurred overnight with the massive rallies for energy and food commodities, while financial markets react to expectations for a weakening global economy. Limit-up type trade in grain markets may provide some underlying support for coffee, but with speculators holding a record net long position, the market is vulnerable to increased volatility. Coffee prices have had trouble sustaining upside momentum for more than 2 sessions in a row since posting a new multi-year high on February 10th.
COTTON
The initial knee-jerk reaction from cotton traders overnight was bullish, as cotton is attempting to follow grain markets higher. However, the upside seems limited as cotton is not a food commodity, and the current events are likely bearish for the global economy. As a result, new buying may be difficult to find. May cotton managed to close moderately higher on the session yesterday in spite of a further sharp break in the stock market as grain prices surged higher on the day, and this helped support a technical bounce for cotton. Traders await further news on the situation in the Black Sea region and the weather situation in the US is becoming a bigger concern.
SUGAR
May sugar experienced an impressive upside breakout this morning as Russia declares war and the surge in crude oil to $100 sparked aggressive short covering. Food commodities have also surged higher while financial markets are under heavy selling pressure as traders react in a classic wartime positioning. Sugar now looks cheap relative to $100 crude oil. A negative shift in global risk sentiment weighed on sugar prices yesterday as it may weaken near-term global demand prospects.
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