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Weak Q4 Demand in Cocoa


While global demand is expected to improve if and when COVID vaccines receive widespread distribution, near-term demand prospects continue to weigh heavily on the cocoa market. With bearish near-term supply news adding further pressure, cocoa could see more downside price action before the market can find its footing.


Over the past 2 weeks, coffee prices have seen whipsaw price action that has left the market unable to retest its mid-December highs. Coffee continues to find support on near-term pullbacks, however as near-term supply issues, a sharp drop with upcoming Brazilian production and a positive longer-term demand outlook continue to underpin prices.


March cotton remains in a short-term uptrend and it is fast approaching the December 18th, 2 1/2 year highs. The dollar was lower, and it is approaching its December 14th low, which was the lowest it had been since April 2018, and the stock indices are just below all-time highs, so two key outside market influences are supportive as well.


An improving demand outlook going into 2021 has put the sugar market within striking distance of 5-week highs. With carryover support from its key outside markets, sugar can maintain upside momentum. March sugar continued to extend its recovery move and closed higher for the sixth session in a row.

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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