Optimism For Cotton Demand
Cocoa prices have reached their highest price levels in over 4 years as they have been boosted by several near-term supply issue. Reports that several firms (including the major US chocolate maker Hershey) are acquiring near-term supply from ICE exchange warehouse cocoa stocks instead of buying cocoa from Ivory Coast or Ghana with a $400 per tonne Living Income Differential continue to provide strong underlying support to the market.
After rallying nearly 18.00 cents over the space of 2 weeks, coffee prices have given back over 6.00 cents of those gains during the past 2 sessions. While a near-record Brazilian crop continues to weigh on prices, coffee has receiving bullish supply/demand developments that can help prices find their footing this week.
March cotton followed Friday’s sharp gains with a breakout rally yesterday that took it through its January highs to its highest price levels since early 2019. More positive news on the vaccine front sparked optimism about cotton demand. It also helped that grain and soybean prices were sharply higher as well.
Sugar continues to see coiling price action just below last Tuesday’s multi-year highs but in spite of improved global risk sentiment and carryover support, the sugar market is now on a 3-session losing streak. While sugar prices should benefit from an improved global demand outlook, a bearish global supply situation could lead to long liquidation this week.
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.