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Cocoa Short-Term Demand Concerns


March cocoa followed through on Monday’s daily reversal and remained on the defensive yesterday and pushed down to the lowest level since November 17th. Although there were sizable gains from US and European equities as well as a strong rebound in the British Pound, near-term demand concerns remain a major source of pressure following news that several Euro zone nations are imposing stricter shutdown measures going into the holiday period.


With some early signs of demand-side improvement, coffee should be able to hold its ground near the recent highs. March coffee pushed to a new 3-month high before closing lower yesterday. There is rainfall in the forecast for Brazil’s south Minas Gerais Arabica-growing region over the next week, and that weighed on coffee prices as it should benefit their upcoming 2021/22 crop.


The market remains in a solid uptrend. The market has been trending higher since last week’s USDA report showed a smaller US crop and tightening ending stocks for 2020/21. March cotton also hit the initial upside target of 75.49 and closed strong which keeps the charts bullish.


Sugar prices have found their footing before they retested their late October spike low, and have benefited from a positive shift in key outside markets. The market continues to receive bearish supply news, however, and that leaves sugar vulnerable to a sizable downside move.

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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