Firm Demand Pace in Cotton
The highest closed since February 24th for December cotton is a bullish technical development and the market looks set for a continued uptrend, and continued buying from fund traders. With more potential damage from tropical storms, and a bullish tilt to the USDA Crop Production and Supply/Demand update, buyers could stay active in the next few days.
With demand prospects unlikely to improve until the market digests key data points late next week, cocoa is likely to remain on the defensive. The market has closed lower for five sessions in a row. News that US fiscal stimulus talks broke down sent outside markets back into negative territory and that is likely to diminish risk appetites. Global demand concerns remain a major source of pressure as fresh coronavirus restrictions will result in a subdued Halloween holiday demand.
The coffee market is facing fresh demand-side pressure just as the Brazilian new crop is in the flowering period. While December coffee is seeing coiling price action this week, it continues to stay clear of last Friday’s 2 1/2 month low. While overall global demand has improved from early pandemic levels, news of fresh coronavirus lockdown in Europe weighed on coffee as that will dampen demand in a region which had seen restaurant and retail shops reopened during the summer months.
The market was able to breakout above the early October consolidation zone. Stronger energy prices provided sugar with significant carryover support as they should strengthen Brazilian domestic ethanol demand. In addition, the Brazilian currency extended its recovery move. Recent dry weather over Brazil’s Center-South mills should have a negative impact on the balance of this season’s cane harvest as well as next season’s output.
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.