Sugar Started Aug With Renewed Strength
Cocoa prices saw little upside follow-through from last Thursday’s outside-day higher close as they continue to have trouble sustaining a recovery move. While the market has extended a choppy price pattern since late June, cocoa has seen bullish supply developments that can help prices regain upside momentum soon. For the week, December cocoa finished with a loss of 32 points (down 1.3%) which was a second negative weekly result over the past 3 weeks. The Eurocurrency and British Pound sustained heavy losses in the wake of July US jobs data, and that put carryover pressure on cocoa prices as that will make it more expensive for European processors to acquire new cocoa supply.
While coffee is a “staple” for many consumers around the globe, concern over out-of-home consumption continues to put brakes on the market’s upside momentum. Although it may see downside follow-through early this week, coffee continues to have bullish supply developments that can provide underlying support to the market. For the week, December coffee finished with a loss of 7.40 cents (down 3.5%) which broke a 2-week winning streak and was a negative weekly reversal from Monday’s 4-week high. Concern that high inflation will lead to a pullback in restaurant and retail shop purchases continues to pressure coffee prices, as the sharp rise in many regularly-bought items has led to many consumers cutting back on their discretionary spending.
December cotton closed higher on Friday after trading to the highest level in a week. The market approached the July 29th high of 97.65 before backing off. More talk of the precarious situation for the Texas crop lent support after the weekly Drought Monitor showed no improvement in west Texas last week. The 1-5 day forecast calls for some rainfall in the Texas Panhandle, but very little in other parts of west Texas. The 6-10 and 8-14 day forecasts call for above normal temperatures and normal or below normal chances of rain in west Texas and the Panhandle.
The sugar market saw chaotic price action last month as carryover pressure from sluggish crude oil and gasoline prices weakened sugar prices since mid-June. In contrast, sugar prices have started out August with renewed strength as the market seems to have the supply fundamentals to fuel a recovery move. For the week, October sugar finished with a gain of 40 ticks (up 2.3%) which broke a 2-week losing streak and was a positive weekly reversal from Monday’s 11 1/2 month low. A rebound in crude oil and RBOB gasoline prices provided the sugar market with early support, while the Brazilian currency regained some strength that in turn gave a boost to sugar prices.
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.