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Upside Breakout in Coffee


Cocoa prices have extended their November recovery move in spite of significant carryover pressure from key outside markets. With bullish developments from both the supply and demand sides of the market, cocoa can lift further clear of last week’s 3 1/2 month low.


After nearly 3 1/2 months of coiling price action, coffee has reached a new 7-year high. Although the market is approaching near-term technically overbought levels, a bullish supply outlook and improving global demand should lead to further upside before this rally runs out of steam. Reports late last week that Brazil’s October coffee exports came in well below last year’s total provided evidence of shipping container shortages and low near-term Brazilian supply, both of which have underpinned coffee prices.


December cotton closed slightly lower on Monday. The dollar was sharply higher. The December Dollar Index traded to new contract highs, and the nearby contract traded to its highest level since July 2020. This would normally be bearish for cotton, but traders are apparently turning their eyes towards China, as there are reports that domestic cotton prices there are high relative to the US.


Sugar prices continue to face pressure from key outside markets, but recent coiling price action has helped the market lift clear of its mid-October lows. The global supply outlook remains bullish, and that should help sugar prices remain well supported on near-term pullbacks.

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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