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Big US Cotton Crop


December cocoa’s coiling price action has been tightening. With increasing concern over Asian demand prospects shadowing the market, cocoa will be vulnerable to a downside breakout move early this week. For the week, December cocoa finished with a gain of 62 points (up 2.4%) which was a sixth positive weekly result over the past 8 weeks. A flare-up of Chinese market risk anxiety weighed on cocoa prices as that could weaken Asian fourth quarter demand prospects.


In spite of a bullish longer-term supply outlook, coffee has had trouble sustaining upside momentum during September as global demand prospects have become an area of concern. If global risk sentiment can rebound, coffee price should be able to lift clear of last week’s lows.


The cotton market feels top-heavy, and with its very high open interest and the outlook for increasing supply just ahead, it looks vulnerable to a significant downside correction. If the trade senses economic problems in China, sellers could become active. Harvest pressure in the US could become a dominant theme in the next few weeks. Cotton crop conditions improved to 64% good/excellent for the week ending September 12, up from 45% a year ago and a 10-year average of 45%.


Bullish supply-side developments in Brazil lifted sugar prices during August to their highest levels in 4 1/2 years, but they lost strength this month due to volatile key outside markets. March sugar extended last week’s pullback as it finished Friday’s trading session with a moderate loss and a second negative daily result in a row.

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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