COCOA
In the space of 7 sessions, cocoa prices have risen more than 320 points and gone from a 1-month low to a 6-month high. Drier than normal conditions over West African growing areas continue to be a source of strength for the market as it points towards lower production this season, and is likely to have a negative impact on early 2020/21 main crop production as well. There has been an uptick in precipitation over the Ivory Coast, but Ghana and Nigeria growing conditions remain a concern.
COFFEE
Coffee prices remain in a volatile trading pattern, but have put together 4 positive daily results in a row for the first time since July 1st. With a very large Brazilian 2020/21 crop already priced-into the market, coffee may be able to extend this rally. The Brazilian currency regained more than 2% in value and reached a new 3 1/2 week high, and that became a major source of support for coffee as n extended recovery for their currency will ease pressure on Brazil’s producers to market their near-term supply to foreign customers.
COTTON
December cotton was unable to take out last week’s high, and the weak close would suggest the market is vulnerable to a corrective break. A continued rise in open interest to the highest level since March 19 suggests that fund traders are adding to their net long position. The inability of the market to make a new high with bullish outside market forces like weakness in the US dollar and a further new high for the stock market shows relative weakness for the cotton market.
SUGAR
Sugar prices have been able to hold their ground within their recent consolidation zone for more than a month now in spite of sizable 2020/21 production increases from Brazil and India. However, their inability to benefit from strong carryover support from key outside markets and fresh bullish supply news may not bode well. October sugar maintained its coiling price pattern above the 200-day moving average, but once again could not sustain upside momentum.
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.