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Softs Are Higher

COCOA

Demand may have reached its low point during the second quarter and the market remains in a steep uptrend. With fresh bullish supply news for the market to digest this week, cocoa prices can extend their current recovery move. The market posted a third close in a row above its 200-day moving average, which is the first time that cocoa prices have achieved that since early March.

COFFEE

The market remains in a steep uptrend but the turn down from a key resistance point (127.15) would suggest that a short-term peak may be in place. After the move to a new 4-month high, the market experienced a quick 5% drop from the highs. The International Coffee Organization (ICO) forecast a 2019/20 global production deficit of 486,000 bags in spite of lower restaurant and retail shop consumption, and that fueled sharp gains early in the day as the ICO’s adjustment came from a 2.4 million bag uptick in global consumption.

COTTON

The July 9 high at 64.90 is a key resistance area. Ongoing dry weather concerns for Texas and a weaker dollar (which came close to testing Friday’s two-year low) have lent support. The trade may also be energized by talk of a video conference meeting between senior US and Chinese trade officials scheduled for August 15 in which they are expected to review the implementation of the phase 1 trade deal. So far, China is behind pace to meet the agreement. However, when it comes to cotton, China at appears to be ahead of the game.

SUGAR

The hook reversal after a run to the highest level since March 10th points to a need for a technical correction. While improving global risk sentiment and the recent strength in key outside markets have helped to fuel sugar’s upside breakout, bullish supply developments from Thailand have been a major source of support.

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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