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Three Day Surge in Cocoa


Cocoa prices have risen more than 220 points over the past 4 sessions and are above their 3 major moving averages for the first time since late September. This has led to the market becoming near-term overbought and while recent supply/demand developments should lead to higher prices levels over the near future, cocoa may be vulnerable to a near-term pullback.


Coffee’s November rally has been fueled by bullish developments from both the supply and demand sides of the market. With prices 16.00 cents above their October month-end close, however, the market has reached near-term overbought levels and may be vulnerable to a near-term pullback. Tropical Storm Iota has caused heavy rainfall and flooding over several major Central American Arabica producers, and that has provided significant support.


The highest close for March cotton since October 27 is a positive technical development. It was an inside trading session yesterday, but the market has managed to rally during the period of increased harvest activity in the US, and fears of sluggish short-term demand. The market has been consolidating for the past two days after Monday’s encouraging vaccine news sparked a rally in the stock market and in cotton.


Sugar prices continue to hold their ground near multi-year highs as the market continues to benefit from bullish near-term supply news. Over the longer-term, however, the sugar market may be better supplied than what is being priced-in at current levels. Indications of lower production in Thailand and the EU continue to support prices this week, with Thailand’s exports likely to remain near multi-year low levels.

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.

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