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Lower Cotton Yield Expected


With traders expecting a smaller ending stocks forecast in this week’s USDA crop production and supply demand report, the market experienced a hook reversal and recovery bounce on Friday. The longer-term demand fundamentals are in question and it will take very strong US exports in order to assume some tightness in US ending stocks. Lower yield and lower production is expected for the report and both world and US ending stocks are expected to be revised lower from burdensome levels. The five day forecast calls for heavy rains across much of Texas in this could raise concerns for fields with bolls open.


After rising nearly 10% in value during July and an additional 10% during August, cocoa appears to have put in a longer-term low during early July. The market continues to face questions over global demand prospects over the rest of 2020, however, so a negative shift in risk sentiment is seen as bearish.


In contrast to many other financial and commodity markets, coffee was able to go into the holiday weekend on an upbeat note and traded up to an 8-month high. For the week, December coffee finished with a gain of 7.65 cents (up 6.0%) and a third positive weekly result in a row. Colombia’s August coffee production came in at 1.09 million bags which was 3% below last year’s levels while their August coffee exports came in at 1.12 million which was 8% below last year’s total.


Sugar has a bearish global supply outlook, negative global risk sentiment and significant weakness in a key outside market also weighing on prices. While it has fallen into near-term oversold price levels, managed money fund traders have built up a huge net long position of 190,081 contracts and this leaves the market vulnerable to long liquidation selling. October sugar fell to a new 5 1/2 week low and for the week, October sugar finished with a loss of 67 ticks (down 5.3%) which was a third negative weekly 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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