ADMIS News
COCOA
After climbing more than 350 points (up 15.4%) from its July low, cocoa’s rally appears to have run out of near-term steam. Although the market has bullish supply/demand factors to provide underlying support, cocoa is likely to have a near-term pullback before it can regain its footing. December cocoa built on early support and reached a new 5 1/2 month high, but lost strength late in the day as it finished Monday’s trading session with a modest loss and a negative daily reversal that broke a 7-session winning streak.
COFFEE
Although there still are questions over near-term demand prospects, coffee will continue to find underlying support from last month’s Brazilian weather event. Last month’s frost damage will lead to lower Brazilian production over the next 2 seasons with some trade forecasts calling for the 2022/23 Arabica crop seeing a 15% or more reduction, which continues to provide underlying support to the coffee market.
COTTON
With a further improvement in the crop, and a lack of new highs on Monday after the stock market recovery, the market looks vulnerable to a near term peak. The market has reached near term upside targets and traders are hesitant to believe that crop production will be down as much as the recent USDA estimate from August 1 conditions.
SUGAR
Sugar has been able to maintain upside momentum and reach new high ground this week in spite of significant carryover pressure from key outside markets. Although the market has bullish supply developments to underpin prices, sugar is becoming increasingly overbought and remains vulnerable to a near-term pullback.
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