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Texas Rain May Help Crop Outlook


Cocoa prices have a long way to go to fully recover from their second quarter losses, but they continue to show signs that a longer-term low may be in. If global risk sentiment can show more improvement, cocoa may find additional buying support. Mild improvement in global risk sentiment was reflected in a positive turnaround in European and US equity markets, which benefited the cocoa market as that will help to soothe near-term demand concerns that have been a source of pressure for more than 2 years.


While coffee has seen a third sizable recovery move fall apart over the past 6 weeks, it continues to hold its ground above the late June lows. The market continues to receive bullish supply/demand developments that should help coffee prices find their footing. Colombia’s June coffee production came in at 955,000 bags which was 10% below last year’s total, and is due in part to wetter than normal weather.


Strength in the grains is adding to the positive tone in cotton. However, the technical recovery bounce could be short-lived as demand factors look weak, and the US crop conditions may be improving. December cotton resumed its selloff yesterday and traded to its lowest level since December 9. The dollar continued its move higher which makes US cotton less competitive on the global market. The 1 to 5 day forecast calls  for little rainfall in west Texas and some modest amounts for the Texas Panhandle.


While they remain at the bottom end of their June/July selloff, sugar prices were able to find their footing in spite of continued weakness in their key outside markets. If there is a sustained turnaround in global risk sentiment, sugar should be able to lift well clear of Tuesday’s 4-month low.

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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