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Cotton Continued a Sharp Rally


Cocoa prices were able to have their first close above their 50-day moving average since mid-April as they have climbed to the upper portion of their late June/early August consolidation zone. If global risk sentiment continues to improve, cocoa may be in the early stages of an extended upside move. A lower than expected US CPI result provided some evidence that inflation levels are receding, which provided significant support to the cocoa market as it may indicate that inflation levels are starting to subside.


As coffee stocks continue to be drawn down, the market may be setting up for an upside breakout of its recent consolidation zone. Talk that the Brazil crop was not as large as believed has helped support. ICE exchange coffee stocks fell by 18,200 bags on Wednesday, which was their third sizable daily decline in a row as they dropped down below the 600,000 level for the first time since July of 1999.


December cotton continued its sharp rally yesterday and traded to its highest level (and first time above 100.00) since June 24. Cash traders reported a lot of mill fixations ahead moving above 100.00. Concerns over tight supply is on traders’ minds, especially with the Texas crop under threat from an extended drought. The dollar was sharply lower, which makes US cotton exports more competitive.


Sugar prices have extended their winning streak to 4 sessions in a row as they have lifted clear of the recent consolidation zone. While there was mixed supply-side news from Brazil, sugar is finding carryover support from key outside markets that can help to extend this recovery move. A more than 1.5% rally in the Brazilian currency provided the sugar market with carryover support as that should ease pressure on Brazil’s Center-South mills to market their near-term sugar supplies.

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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