ADMIS News
COTTON
March cotton traded right up to the 50-day moving average on Thursday but closed well off that level. This is the second time this month that it has approached that line, and if it moves above it, it could be significant. The dollar fell to a new five-month low yesterday, but it reversed and closed higher on the day. The lower dollar helps US export prospects. The cotton market could get a boost today if the weekly Export Sales report comes in strong. Last week’s report showed net sales of 147,991 bales for the week ending December 14, which was up from 71,405 the previous week and was the highest since November 23. Cumulative sales for the 2023/24 marketing year are the lowest for this point in the season since 2016/17, but that is not a shock considering the USDA is forecasting total exports for the marketing year to be the lowest since 2015/16.
COCOA
Cocoa’s post-holiday losing streak marks only the third time since mid-year that the market has seen three negative sessions in a row. Traders have noted an increase in commercial selling, which they are attributing to prices being at 46-year highs and to an effort to finish transactions by the end of the year. A pullback in the euro and British pound may have encouraged profit-taking and additional long liquidation. And with the market seeing a 24% gain for the quarter and a 69% gain for the year, there is some incentive to book a portion of those profits by the end of the session. Keep in mind that El Nino is expected to last through the second quarter, which could cause production problems in Ecuador (too much rain) and southeast Asia (too dry).
COFFEE
Coffee extended its post-holiday recovery to a third straight session on Thursday, but a 4-cent pullback late in the day showed a loss of momentum. The market was slightly lower overnight. The 50-cent gain (34%) in the fourth quarter has made it vulnerable to a pullback. Lower Robusta production this year has supported the NY coffee market despite a strong Arabica crop in Brazil. Indonesia’s Sumatra (Robusta) coffee bean exports totaled 12,296 tonnes in November, down from 57,502 a year ago. Vietnam’s 2023 exports are estimated at 1.9 million tonnes, down 9.6% from 2022. Their December exports are estimated at 190,000 tonnes, up from 80,000 in November but down 4.5% from a year ago. There have been reports that Vietnam’s harvest is well-advanced but that farmers are reluctant to sell their crops, as they wait for higher prices.
SUGAR
With Brazil’s harvest finally winding down, the sugar market’s focus has shifted to tight supply in India and Thailand and its oversold condition. March sugar broke out of its recent consolidation to the upside yesterday and went on to post a large gain. Brazil remains on course for record production, but many cane producers are close to wrapping up their harvest operations as a wetter trend arrives. Despite record production out of Brazil, lower production in India and Thailand could keep supplies in balance in the coming year. India is expected to keep its export ban in place as it struggles to keep sugar prices under control and meet its ethanol production goals.
Interested in more futures markets? Explore our Market Dashboards here.
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.
