ADMIS News
SUGAR
July sugar backed off overnight after making a new contract high for the seventh-straight session on Thursday that took it to its highest level in 11 1/2 years. The market is also on track to post its largest monthly gain in more than 12 years. While supply issues in India, the EU and China have provided support, a shift in focus towards Brazilian output could leave traders thinking the market has gotten overpriced. Technical indicators are overbought, but there has been no confirmation of a top. Several times during this rally the market has put in a key reversal only to have that negated the following session with a move to a new high. The Brazilian currency gained 1% on Thursday, which may have supported sugar on the idea that it eases pressure on mills to produce sugar for export.
COCOA
July cocoa drifted lower overnight and threatened to take out Wednesday’s seven-session low, but it could still post a seventh monthly gain in a row today. Rainfall over West African growing areas over the past few weeks should benefit the region’s late-harvested mid-crop production, and this seems to have weighed on prices this week. However, Hershey’s earnings statement indicated that demand was resilient despite higher prices, and Mondelez had better than expected earnings as well. If US PCE comes in lower than expected today, it could improve the demand outlook for cocoa.
COFFEE
July coffee edged lower overnight to trade to its lowest level since April 12. The market’s choppy action this week has kept it well above its three major moving averages, and it is still on track for a decent gain this month. The market has managed to hold above the 50% retracement of the March 31-April 18 rally, which comes in at 185.22. A rebound in the Brazilian currency provided early support to coffee yesterday on ideas it would ease pressure on Brazilian farmers to market their product to foreign customers. Brazil’s Arabica harvest has been underway for a few weeks, and that appears to have been a negative force for prices since the market put in a high on April 18. It is becoming more apparent that the 2023/24 “off-year” crop be larger than the 2022/23 “on-year” crop.
COTTON
A better export sales report supported a higher close in July cotton on Thursday, and there was some mild follow-through overnight. The report showed US cotton export sales for the week ending April 20 at 194,936 bales for the 2022/23 (current) marketing year and 19,096 for 2023/24 for a total of 214,032. This was up from 100,087 the previous week and the highest since March 23. This change in direction in sales was welcome news for the bulls. Sales have reached 105% of the USDA forecast for the marketing year versus a five-year average of 103%. The largest buyer this week was Turkey at 63,313 bales, followed by China at 45,163. The weekly US Drought Monitor showed drought conditions were essentially unchanged in west Texas, which was viewed as supportive to the market.
Interested in more futures markets? Explore our Market Dashboards here.
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.
