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Cotton Under Pressure


Cocoa’s demand concerns remain a front-and-center issue for the market, particularly in Europe and North America where coronavirus restrictions are likely to remain in place. Key outside markets and global risk sentiment have taken a positive shift early this week, however, which combined with bullish supply news has helped cocoa prices hold their ground above their recent lows.


Coffee prices remain in close proximity to last week’s contract low. With the market receiving some help on the demand front, coffee may be in position to bounce. The Brazilian currency extended its recovery move with a 1% gain on Monday, and that provided coffee with carryover support as it eases pressure on Brazil’s coffee producers to market their near-term supply. There were dry conditions over Brazil’s key south Minas Gerais growing region over the past week, and there is no rainfall in the forecast until the middle of next week.


With less threatening weather, December cotton came under significant selling pressures overnight but support held and the market has bounced well up from the lows. Much of Texas looks like it could get some rain in the next week. The 5-day forecast calls for an inch or more across roughly two-thirds of the state, with only the far southwestern corner receiving less than 1/2 inch.


Sugar’s coiling price action has kept the market close to its June 10th high, but unable to break out above that level. Sugar has been unable to benefit from carryover support from key outside markets and improving risk sentiment, and remains vulnerable to a near-term pullback. While crude oil reached 2 1/2 month highs, the Brazilian currency gained more than 1% in value and risk appetites turned positive late in the day, sugar prices did not bounce.

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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