Sugar Gives Back Most Gains
Cocoa continues to face demand issues in many regions of the world, but there are signs that the current supply issues may provide additional support going into the final weeks of the 2021/22 season. As global risk sentiment improves, cocoa may be in position to trend higher. West African growing nations are likely to see this season’s production issues continue into the upcoming 2022/23 season, and that continues to provide underlying support to the cocoa market.
Coffee prices have been weighed down by concern over out-of-home consumption, and now have been pressured by bearish supply news. While global risk sentiment appears to have taken a positive shift, coffee is on the defensive and has closed lower for the 4th session in a row. The potential for a sharp increase in ICE exchange coffee stocks continues to be a major source of pressure.
The cotton market appears to be consolidating its gains of the past four weeks, particularly the sharp rally in the wake of the bullish USDA report last Friday. The market left a few gaps on the way up, which it can go back and fill and still maintain a positive trend. A sharp rally in the dollar on Thursday also pressured cotton. The weekly export sales report was unimpressive, and US traders are noting competition from Brazil.
Sugar prices have given back most of the August gains and are on-track for a negative weekly reversal. Unless it can receive carryover support from key outside markets, sugar prices may slide further to the downside. China’s July sugar imports came in more than 35% below last year’s level, which has put their 2022 import total 17% behind last year’s pace. This weighed on sugar prices as that indicates weaker demand from one of the world’s largest sugar importing nations.
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.