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Coffee Priced-In Weak Demand


As the virus fades and demand turns more positive in 2021, the market should be in a position to seek higher prices. If inflation becomes a factor, end-users will want to expand the pipeline after the slow consumption in 2020. For the week, March cocoa finished with a gain of 33 points (up 1.4%), a second positive weekly result over the past 3 weeks and a positive weekly reversal from Monday’s 3-month low.


Coffee demand took a big hit in 2020, and the market also experienced a near record harvest from Brazil. However, as demand improves, inflation picks up, the US dollar drops, and the focus shifts to the possibility of a much smaller Brazilian crop for 2021, the market should be set for a rally. For the week, March coffee finished with a gain of 1.60 cents (up 1.5%) which broke a 3-week losing streak and was a positive weekly reversal from Wednesday’s 3 1/2 month low.


December cotton sold off sharply on Friday, giving back most of its gains from earlier in the week and approaching its lows from Monday. Increasing coronavirus cases in the US and around the world have resurrected concerns about textile demand going forward. For Tuesday’s USDA Crop Production and Supply/Demand (WASDE) reports, the average trade expectation for US production is 16.56 million bales (range 15.90-17.00 million) down from 17.05 million in the October report.


Sugar continued its volatile whipsaw price action through the first week of November, and in spite of mixed signals from key outside market is back to within striking distance of posting a new 2 1/2 year high. The market continues to have a very large net spec long position and a bearish global supply outlook, and that combination leaves sugar vulnerable to additional long liquidation.

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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