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Surging Energy Prices Support Cotton Demand

COCOA

While cocoa was unable to avoid a tenth negative daily result over the past 12 sessions, the market was able to find support near the late December/early January lows. Global demand concerns may continue to be a source of pressure, but cocoa prices are showing early signs that they are closing in on a near-term low.

COFFEE

For the second time in three sessions, coffee prices have followed a sharp selloff with a recovery move. While the market remains vulnerable to additional long liquidation, coffee should be closing in on a near-term low. Indications that Russia’s invasion of Ukraine could disrupt shipments of fertilizers to Brazil provided a boost to coffee prices, as they provide 69% of Brazil’s fertilizer imports.

COTTON

May cotton closed sharply higher on the session yesterday after breaking out of a two-day consolidation and trading to its highest level since Thursday when it put in an outside reversal lower. Corn, wheat, and crude oil all traded sharply higher off the Russia/Ukraine war, and this lent support to cotton as well.

SUGAR

Following last week’s failure, sugar prices have again broken out of their recent consolidation zone to the upside. While near-term demand remains uncertain, sugar is in a better position to extend a recovery move. Huge rallies up to multi-year highs in both crude oil and RBOB gasoline provided carryover support to the sugar market as they should help to strengthen ethanol demand in Brazil and India.

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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