ADMIS News
COCOA
With the market focusing on demand this week, positive news over the weekend helped cocoa prices to regain upside momentum. Although it is nearly 100 points above its early July low, cocoa will need to see positive quarterly grindings results later this week to see a sizable extension to this recovery move. A group of major chocolate manufacturers entered into an agreement with Ivory Coast and Ghana to ensure fair cocoa prices for their nation’s farmers, which includes backing the Living Income Differential (LID) of $400 per tonne on cocoa contracts from both nations which has been in place since 2019.
COFFEE
Coffee prices have been unable to find their footing this month as they have fallen to the lower portion of the March/July consolidation zone. In spite of ongoing production issues in South America and Central America as well as tightening near-term supplies in Europe and North America, coffee has been unable to shake off concern over near-term demand prospects. A more than 1.5% decline in the Brazilian currency weighed on coffee prices as continued weakness in that currency will make Brazil’s producers more aggressive with marketing their near-term supply to foreign customers.
COTTON
The cotton trade is concerned about demand, from a stronger dollar making US exports less competitive and from concerns about Chinese demand as they battle Covid. Stock markets in China and Hong Kong fell sharply on Monday as a rise in cases weighed on sentiment, and this pressured cotton. The weekly Crop Progress report showed 39% of the US cotton crop was rated good/excellent as of July 10, up from 36% the previous week but down from 56% last year and below the 10-year average of 51%.
SUGAR
If global risk sentiment and key outside markets can regain their strength, sugar prices should climb up towards a retest of their May/June highs. October sugar continued to hold its ground at the high end of last Friday’s trading range. A sharp pullback in the Brazilian currency weighed on sugar prices early yesterday, as that may encourage Brazil’s Center-South mills to produce more sugar for export.
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.
