Slower Economy May Slow Demand
December Cocoa experienced a key weekly reversal last week after posting a contract high on Wednesday. With the possibility of a Covid-related setback in demand, and continued strong production news, the market appears poised for a further decline. For the week, December cocoa finished with a loss of 53 points (down 2.0%) which broke a 3-week winning streak.
Coffee’s 16.00 cent trading range during August so far is a fraction of its whipsaw action during the second half of July. A bullish supply outlook continues to underpin the market. For the week, December coffee finished with a loss of 4.25 cents (down 2.3%) and a third negative weekly result over the past 4 weeks.
December cotton fell to its lowest level since August 12 on Friday but recovered to closed higher on the day and the market bounced overnight. Still, it was the first weekly decline in a month. The dollar turned lower on the session Friday after trading to a new high for the move, and this lent support to cotton.
While the sugar market is extremely overbought technically, the supply fundamentals continue to show a bullish tilt. The worst drought in 50 years and recent frost damage in Brazil’s Central-South region could keep sugar’s supply outlook on a bullish track going forward.
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.