No Sign of Peak in Cotton
Over the space of 3 1/2 weeks, cocoa prices have gone from a 9-month low to a 5-month high as bullish supply-side developments have added to a positive longer-term demand outlook. The market may have gotten ahead of itself during the more than 330 point recovery move, however and may be vulnerable to a near-term pullback.
While coffee prices have lost upside momentum, they will start this week’s trading above their early August consolidation zone. With clear signs that Brazil’s upcoming production has been impacted by frost damage, coffee should be able to extend this current recovery move.
December cotton has posted new contract highs for the fourth session in a row. The dollar sold of sharply on Friday, and that added support to US export commodities like cotton. A key factor in the rally late last week was Thursday’s USDA supply/demand update, which lowered US harvested acreage for 2021/22 to 10.36 million acres from 10.50 million in the July report and average yield to 800 pounds/acre from 814.
Sugar’s August updraft has taken prices above the 20.00 cent level for the first time in 4 1/2 years. While Brazil’s Center-South cane crop has been impacted by last month’s frost, the market has risen into near-term overbought levels and may be vulnerable to a near-term setback.
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.