Coffee Futures Higher
There have been more indications that demand should see some improvement over the rest of this year. As a result, positive supply/demand developments have been able to overcome lukewarm key outside markets to help cocoa prices maintain their upside momentum.
While there is still a long way to go before conditions return to pre-pandemic levels, coffee should remain well supported on near-term pullbacks. September coffee rallied to a new 11-week high yesterday but closed lower. While there are cooler temperatures in the forecast, mostly dry conditions over Brazilian Arabica growing areas weighed on coffee as that should help to minimize further delays for this year’s harvest. Lukewarm global stock markets do not bode well for near-term demand, and that weighed on coffee prices.
Concerns about demand in the face of increasing coronavirus cases in the US and escalating US/China tensions has helped to pressure. There are still some concerns about damage to crops along the Texas coast from Hurricane Hanna over the weekend and to the west Texas crop from the extended dry period earlier this summer. It is still too early to tell about the damage this weekend, but the Texas crop overall appears to have stabilized, albeit at worse conditions than average.
Sugar’s abrupt change in direction at the start of this week was due in part to bullish supply developments out of Thailand, so a change in their weather has put some brakes on its recovery. The market continues to have problems climbing above and beyond the June and July highs, and could see a near-term pullback if key outside markets do not show significant improvement.
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.