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Uptrend For Global Consumption

COCOA FUTURES

Cocoa prices have regained nearly 100 points in value over the past 2 sessions and are on-track for a positive weekly reversal. If key outside markets remain positive, cocoa should remain in a short-term uptrend. Ongoing concern with a lack of fertilizers and pesticides in several West African growing areas has provided support to the cocoa market, as that will make less likely that their upcoming 2022/23 production will come in above this season’s output. Many of West Africa’s fertilizers originate in Russia, so their invasion of Ukraine has created a bottleneck for those exports which in turn have driven their prices sharply higher.

whole cocoa pods

COFFEE FUTURES

The market remains on-track for a sizable weekly gain and the first positive monthly result since May. Although it may be vulnerable to end-of-week profit-taking and long liquidation, coffee prices should continue to find support from bullish supply developments. There is increasing concern that Brazilian growing areas will continue to have drier than normal conditions through the end of this year due to the current La Nina weather event. Brazil’s upcoming 2023/24 Arabica production will be an “off year” crop in their 2-year cycle which normally results in a sizable decline from the previous season’s output.

COTTON FUTURES

Consolidation is normally a continuation pattern and December cotton has consolidated since August 15 in a fairly tight range. The steep uptrend in open interest is a positive force. December cotton closed near unchanged after rallying off a very strong export sales number that traders then started to question. The USDA FAS launched a new Export Sales Reporting and Maintenance System on Thursday that “affected both the quality and the physical dissemination of the weekly export sales data.” The agency retracted the data, and an update will be made available as soon as all issues are resolved.

SUGAR FUTURES

Sugar prices have seen choppy action following Friday’s positive reversal, and remains on-course for a second negative weekly result in a row. With global risk sentiment on the mend, a rebound in key outside markets can help sugar find support. Crude oil had a sizable pullback from a new 3 1/2 week high, which in turn put carryover pressure on the sugar market as that could lead to weaker ethanol demand in Brazil and India.

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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