ADMIS News
COCOA
May Cocoa was higher early Monday as the market along with other commodities drew support from the rally energy prices and the closure of the Strait of Hormuz. Steep rallies in crude oil and natural gas will increase the cost of production as well as the cost of fertilizer. Some of the largest suppliers of fertilizer in the world export their products via the Strait. Ghanaian cocoa farmers say they have not been paid for deliveries, even after the regulator released funds to buyers to settle arrears and support the struggling sector. The fact that Ivory Coast and Ghana have lowered their official prices may have also sparked ideas that backed up supply would finally be sold.
COFFEE
May Coffee reached its highest level since February 13 early Monday, drawing support as most commodity markets are from the steep rally in crude oil and natural gas. Among the factors supporting the market may be the threat of higher fertilizer exports. The market was already supported coming into the week after dry weather conditions emerged in Brazil last week. Brazil growers were also reluctant to sell at the low prices from late February. World Weather Inc. said Brazil coffee areas will get rain this week mostly from northeastern Sao Paulo to Cerrado Mineiro and Sul de Minas. Ample rains are also bee seeing in southern Sumatra and Sulawesi, Indonesia.
SUGAR
May Sugar gapped higher early Monday and reached its highest level since mid-January. The market is finding support from the rally in energy markets, as higher gasoline prices increase the incentive for sugar cane growers to increase ethanol production at the expense of sugar. A Reuters poll of sugar traders and analysts released on Friday had an average expectation for the global sugar supply to shift from a surplus of 1.39 million metric tons this year to a deficit of 1.50 million in 2026/27. Brazil’s Centre-South production has an average expectation at 40.38 million tons in 2026/27, little changed from the 2025/26. The cane crop was expected to rise to 625 million tons from around 610 million this year, but sugar’s share of crushing was expected to fall to 48.8% from about 50.7% this season. The shift in expectations for a global deficit in 2026/27 is a new development.
COTTON
Like other commodities, cotton rallied early Monday in jerk reaction to the rally in crude oil to $119 per barrel. Higher crude prices add to the cost of producing man-made fibers, which can lend support to cotton, provided that trend stays. Higher energy prices also add to the cost of production for cotton as well, for diesel fuel for machinery and for fertilizers. On the other hand the US dollar reached its highest level since November, which make US cotton more expensive on the global market, and the selloff in equity markets hurts the demand outlook. The trade is not expecting significant changes to the US 2025/26 supply/demand outlook when the USDE releases its monthly report on Tuesday.
Interested in more futures markets? Explore our Market Dashboards here.
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.
