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Choppy/Lower Trade in Sugar Continues


If global risk sentiment can show any sort of improvement, cocoa seems to be in position to see a continued short-term uptrend. Next season’s West African production is unlikely to have a sizable rebound from this season, which provided the cocoa market with support. Following above-average rainfall last week, many West African growing areas are forecast to have wet weather on most days through the middle of next week. Although this would benefit cocoa trees in the region, this extended wet weather may lead to slow early progress for 2022/23 main crop harvesting and drying of beans.


Even with an uncertain demand outlook, coffee should continue to be well supported by a bullish supply outlook. Sluggish global risk sentiment and high inflation levels have weakened the outlook for out-of-home consumption, and that has been a source of pressure on the coffee market. In addition to sluggish global equities, a more than 1% pullback in the Brazilian currency also put carryover pressure on coffee prices.


A modest improvement in crop conditions last week, coupled with a firm dollar and an overbought condition sparked profit taking selling yesterday. Global recession is a threat and helped pressure many commodity markets. Traders know the US crop in bad shape, but they also wonder if the worst news is already priced into the market. Conditions are still hovering around record lows. As the crop matures and bolls open, additional rainfall can cause damage.

sugar cubes


Sluggish global risk sentiment and weakness from key outside markets could lead to a downbeat finish to the month. October sugar found initial support to reach a new 2-week high yesterday, but fell back on the defensive. Huge selloffs in crude oil and RBOB gasoline put severe carryover pressure on the sugar market, as their pullback is likely to weaken near-term ethanol demand prospects.

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.

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