Strong Demand Continues to Support Cotton
While there is a positive longer-term outlook, cocoa’s abrupt change in fortune underscores the market’s near-term demand concerns. Although there are bullish supply developments that can provide support, cocoa is likely to see further downside price action before the market can find a near-term floor.
A bullish longer-term outlook helped coffee to finish 2020 more than 23.00 cents (or 22%) above its early November lows. With a negative shift in global risk sentiment adding pressure, a reminder of bearish near-term factors from both the supply and demand sides of the market has put coffee back on the defensive this week.
March cotton closed sharply higher yesterday but well off its high of the day. The market reached a new contract high during the session, taking out the previous contract high from July 2018. The nearby contract traded to its highest level since December 2018.
Sugar was able to extend its winning streak to 9 sessions as an improving longer-term demand outlook continues to provide underlying support. March sugar started the new trading year with a gap-higher opening and reached the highest level since May 2017.
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.