ADMIS News
COTTON
December cotton sold off sharply Friday and closed 4.00 cents lower, the daily limit. Limits expand to 5.00 today. It was the lowest close since July 25. The market was down 6.75 on the week. It has closed lower in three of the past four weeks and is down 27.05 (-23%) since putting in a secondary top on August 15. Cotton was pressured by a sharply higher dollar on Friday, which marked another new 20-year high. Traders are blaming the strong dollar and worsening economic outlook for the selloff in cotton.
COCOA
Cocoa is traditionally one of the more economic sensitive commodities, so the “risk off” mood following last week’s FOMC meeting results has driven prices sharply to the downside. While the market is technically oversold, cocoa will need to see clear improvement in global risk sentiment in order to recover. For the week, December cocoa finished with a loss of 113 points. A badly-received UK “mini” budget added to the severe negative shift in global risk sentiment that pressured the cocoa market late las week as it weakened its near-term demand outlook.
COFFEE
Last week’s Fed rate hike increased concern about commodity demand destruction, but while there were selloffs across most markets last Friday, coffee had a positive weekly reversal from last Monday’s 4 1/2 week low. While the coffee market may experience some volatility ahead, bullish supply factors could spark a new leg higher. For the week, December coffee finished with a gain of 5.35 cents (up 2.5%) which broke a 3-week losing streak. A more than 2% selloff in the Brazilian currency put carryover pressure on the coffee market as that will encourage Brazil’s producers to market their remaining near-term supply to foreign customers. The La Nina weather event has negatively impacted coffee production in Brazil and Colombia which together account for more than half of global Arabica output.
SUGAR
While the sugar market has seen wide-sweeping coiling price action over the past 2 weeks, it has been unable to climb above its 50-day moving average. Unless there is significant improvement in key outside markets and global risk sentiment, sugar prices are likely to remain on the defensive. For the week, March sugar finished with a gain of 8 ticks (up 0.5%) which broke a 3-week losing streak and was a positive weekly reversal from last Monday’s 13-month low.
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