Bullish Technical Action in Cocoa
Cocoa prices have quickly regained upside momentum following a 1-day pullback as they continue to find support from bullish supply/demand news. From the supply side, a group of pod counters told Reuters that they were revising their forecast for Ghana’s 2021/22 cocoa production from 900,000 all the way down to 675,000 tonnes, which would be an over 35% decline from their output last season and would be their lowest full-season production total since the 2009/10 season.
While the coffee market has been moving higher since the first session of January, it continues to see back-and-fill price action and an inability to sustain upside momentum. With improving demand and bullish supply developments in Brazil and Colombia, coffee should remain well supported on near-term pullbacks. The Brazilian currency rallied to an 8-week high, which provided the coffee market with carryover support as that should ease pressure on Brazilian farmers to market their remaining near-term coffee supplies.
March cotton closed moderately lower yesterday despite a supportive export sales report. It also followed a bullish supply/demand report on Wednesday. The market spent Thursday inside Wednesday’s range and appeared to be consolidating the gains in made in response to the supply/demand report, which showed surprising declines in US and world ending stocks for 2021/22.
While key outside markets continue to have volatile price action, sugar has bullish supply factors to help support. Larger than expected early-season sugar production in Thailand put additional pressure on sugar prices as most of their increased output will head out into the global export marketplace.
Risk Warning: Investments in Equities, Contracts for Difference (CFDs) in any instrument, Futures, Options, Derivatives and Foreign Exchange can fluctuate in value. Investors should therefore be aware that they may not realise the initial amount invested and may incur additional liabilities. These investments may be subject to above average financial risk of loss. Investors should consider their financial circumstances, investment experience and if it is appropriate to invest. If necessary, seek independent financial advice.
ADM Investor Services International Limited, registered in England No. 2547805, is authorised and regulated by the Financial Conduct Authority [FRN 148474] and is a member of the London Stock Exchange. Registered office: 3rd Floor, The Minster Building, 21 Mincing Lane, London EC3R 7AG.
A subsidiary of Archer Daniels Midland Company.
© 2021 ADM Investor Services International Limited.
Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. The information and comments contained herein is provided by ADMIS and in no way should be construed to be information provided by ADM. The author of this report did not have a financial interest in any of the contracts discussed in this report at the time the report was prepared. The information provided is designed to assist in your analysis and evaluation of the futures and options markets. However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to ADMIS. Copyright ADM Investor Services, Inc.