Coffee Higher Outlook
Following a more than 600 point decline from mid-February to mid-March (losing more than 21% in value), cocoa’s ability to sustain upside momentum has relied n global demand concerns being soothed by stronger outside markets. After 4 positive daily results in a row, September cocoa saw an abrupt change in fortune s it fell from a new 2-week high to finish Friday’s trading session with a heavy loss. For the week, however, September cocoa finished with a gain of 25 points (1.1% higher).
While coffee continues to have trouble lifting clear of its contract low, its monthly price range during June has been its smallest since March of 2019. With the market dealing with a record Brazilian crop and with global demand concerns, coffee is showing some early signs that a longer-term low may be in. For the week, September coffee finished with a modest gain of 0.75 cent (0.8% higher) that was only the third positive weekly result over the past 11 weeks.
With mostly hot and very dry conditions expected for West Texas through July 12, the cotton market seems to be in position for another leg higher. Demand news remains strong, Texas crop ratings are already poor, and traders expect a lower planted area number in the USDA’s Acreage report on June 30. For Tuesday’s Acreage Report, traders are looking for US cotton planted area to come in around 13.153 million acres (estimates range from 12.5 to 13.75 million), down from the March estimate of 13.703 million.
After consolidating over the past few weeks, sugar appears to be making a turn towards the downside. For the week, October sugar finished with a loss of 56 ticks (4.6% lower) which was a second negative weekly result over the past 3 weeks. A negative shift in global risk sentiment fueled a selloff in energy markets, and that was a source of carryover pressure on sugar prices as it will weaken near-term Brazilian ethanol demand.
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.