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Coffee Volatile Uptrend


Volatile uptrend with Brazil harvest near 90% complete. Coffee has been grinding its way higher over the past 2 weeks, but the market cannot shake a volatile price pattern. Recent bullish supply/demand developments should help coffee prices stay fairly well supported on any near-term pullbacks. December coffee saw an abrupt change in fortune yesterday and fell back from a new 3-week high.


Cocoa’s demand concerns remain a front and center issue for the market as they were able to overcome bullish supply-side news and keep cocoa from extending its recovery move. Nigeria’s cocoa association said that their 2020/21 cocoa production could fall 20% from this season’s levels, and that helped to support early buying yesterday. Nigeria and Ghana have both dialed back their production estimates for the 2019/20 season, and drier than normal conditions should result in Ivory Coast production falling below last season’s total.


The bark is normally louder than the bite, but in this case the hurricane intensity could cause significant damage to the Delta cotton crop. The market has already priced in some damage so it will take bullish news to support a move to new highs. Hurricane Laura was upgraded to a category-4 storm and is expected to cause catastrophic damage to the Gulf Coast near the Louisiana and Texas border.


Sugar has found support from stronger key outside markets and improving global risk sentiment, but the market has been unable to overcome bearish supply developments from its 2 largest producing nations. Until the supply outlook changes for Brazil and/or India, sugar remains vulnerable to more selling pressure.

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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