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Sugar Remains Vulnerable


Cocoa prices continue to have trouble sustaining upside momentum as near-term demand concerns remain a front and center issues for the market. There will be critical demand data starting later this week that will provide evidence of cocoa’s demand outlook and if the market can hold above the mid-December lows, cocoa may be in a good position to begin a longer-term recovery move.


While global demand will remain an area of concern over the next few months, coffee has a positive longer-term supply/demand outlook that can help the market maintain upside momentum. For the week, March coffee finished with a loss of 4.55 cents (down 3.5%) which broke a 4-week winning streak.


For Tuesday’s monthly USDA report, US cotton 2020/21 ending stocks are expected to come in at 5.39 million bales versus 5.70 million in the December report. US production is expected to come in at 15.66 million bales (range 15.10-16.00 million) versus 15.95 million in December. US exports are expected to come in at 15.02 million (range of 14.48-15.25 million) versus 15.00 million in December.


Global risk sentiment and energy prices may be moving in its favor, but sugar remains vulnerable to additional long liquidation as fund traders are holding a large net long position. For the week, March sugar finished with a gain of 11 ticks (up 0.7%). A positive tone to global risk sentiment provided sugar with early support as that points towards improving global demand prospects.


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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