Cocoa in Overbought Condition
Cocoa may be in danger of a negative weekly key reversal and the market remains in an overbought condition. The steep decline in open interest suggests that short-covering is the fuel for the rally and this is not a good foundation for follow-thru to the upside.
While coffee has bullish Brazil supply developments to provide underlying support, that has not been enough to prevent a slide in prices. Unless there is a significant rebound in global risk sentiment, coffee could remain on the defensive.
The market looks vulnerable to a pullback as weak economic news could be seen as a bearish demand development. The market was pressured yesterday by a strong dollar and weak commodity prices, especially crude oil.
Sugar continues to have bullish supply-side developments that will underpin prices. With the market now on-track for a negative weekly key reversal, however, sugar will need to see a significant turnaround in key outside markets to avoid further downside price action.
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.