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Coffee Sustains Upside Momentum


Cocoa prices have been able to overcome global demand concerns and have lifted clear of their early November lows. Now that the market is receiving some positive demand-side developments, cocoa should be able to trend higher. Positive comments on their June-August sales by major global manufacturer Barry Callebaut provided underlying support as they helped to soothe global near-term demand prospects.


After volatile price action early this week, coffee has been able to sustain upside momentum and is on a 5-session winning streak. The market is also within striking distance of climbing above all 3 major moving averages for the first time since mid-September which would be further evidence that a low may be in.


While the vaccine news is a bullish longer-term factor, the market is still in the process of absorbing a bearish USDA production and supply/demand report. While crop conditions fell significantly during the month of October due to an active hurricane season, yield and production were revised higher and ending stocks came in well above trade expectations.


While sugar has benefited from improved global risk sentiment, stronger key outside markets and doubt over India’s export subsidy this season, it has not been able to overcome sizable output increases from its top 2 producing nations. With increasing prospects for a global production surplus this season, sugar remains vulnerable to 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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