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Coffee Demand Improves


The market continues to find support from an improving global demand outlook. A negative turn in global risk sentiment could put the market back on the defensive, but coffee should remain relatively well supported on pullbacks. December coffee extended its upside breakout move to a new 7 1/2 month high. Coffee continues to find support from declining ICE exchange coffee stocks which fell a hefty 38,738 bags on Monday to finish August at 1.234 million, which is their lowest month-end total since February of 2000.


Cocoa prices have seen a second sizable monthly gain in a row and a new 6-month high. Demand remains a front-and-center concern and with the market’s near-term overbought condition, cocoa may be vulnerable to a near-term pullback. A sizable early rally in the Eurocurrency provided cocoa with carryover support as it will benefit the near-term European demand outlook.


December cotton closed well off of its highs from early yesterday and there does not seem to be enough damage from the hurricane for the market to stay in a steady uptrend. The market drew support from further weakness in the dollar, which traded to its lowest level since the end of April, as that helps make US cotton more attractively priced on the export market.


While the European sugar beet crop is down this year, surging production from Brazil and what looks to be a large increase in production from India are offsetting factors. Germany’s refined sugar production from beets for 20/21 season is expected near 4.12 million tons from 4.23 million last season. In spite of the Dollar’s slump and stronger energy prices, sugar remains vulnerable to near-term pullback.

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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