Cocoa Chart Action Positive

COCOA

Volatility should remain high despite a tight early range trade this morning. In fact, the Ivory Coast and Ghana continue to see mostly dry conditions with temperatures near and or above normal and no rain expected in the upcoming three days. East Africa (Ethiopia, Kenya, Tanzania) are also projected to be mostly dry with temperatures above normal through the weekend. However, there is the possibility of isolated showers in the southern portions of East Africa and that could restrain the initial upside action today. Reports of cocoa smuggling from the Ivory Coast to Guinea was estimated to be 50,000 metric tons through the October and December timeframe which could artificially lower Ivory Coast end of season arrival totals/production and artificially raise Guinea arrivals. According to a European export company in the Ivory Coast smuggling is becoming more rampant with as much as 8,500 tons of Ivory Coast cocoa crossing the border on December 24th. Therefore, we must remember to adjust Ivory Coast production results when comparing the current crop with the prior crop. Unlike Thursday when March Cocoa started out under noted pressure and closed poorly, cocoa chart action this morning been all positive. Given early action the cocoa market is on course for a large weekly gain. However, a 2-year low in the Euro and a 14 ½ month low in the British Pound undermines cocoa demand as London and European dealers/confectioners have lost substantial buying power this week.

colorful cocoa pods

COFFEE 

With March coffee followed through on Tuesday’s late rebound and breaking a 4-session losing streak yesterday, the market starts today on-track for a weekly upside reversal from Tuesday’s 4-week low. To post a weekly reversal requires a close today above $321. In a short-term price positive but long-term negative price issue for the next crop ongoing wet weather over Vietnamese growing areas has delayed the finish of their harvest and will negatively impact the drying and storing of beans. Clearly, rain in Vietnam  has underpinned coffee prices this week. Sources on the ground in Vietnam indicated at least 20% of their coffee beans have not been harvested yet suggesting that low quality beans are an issue that could get worse. On the other hand, year-end holidays in Vietnam and Indonesia have thinned trading activity but as is usually the case Asian growers tend to accelerate sales ahead of the lunar new year which should begin to weigh on global coffee prices in the weeks ahead.

COTTON

The path of least resistance remains down in cotton with today’s downside probe producing an eight-day low! However, soybean prices have rebounded $0.65 since the middle of December with cotton prices capable of posting multiyear lows with only a modest downside extension below 67.50 and that could further the argument that some US cotton acres will shift toward soybeans and other alternatives in the upcoming US crop cycle. From a technical perspective, March cotton was able to build on early support yesterday and reached a 1-week high, but lost strength late in the day to finish Thursday with only a modest gain and that in turn leaves the market on course for a fourth negative weekly result over the past five weeks. While not as important of an impact as crop planting decisions, the mid-December to present rally in the petroleum complex should provide some minimal carryover support to cotton market as that will make polyester and nylon fabrics more expensive in relation to cotton.

SUGAR

March sugar shook off mild early pressure and climbed to a 2-week high before finishing Thursday with a sizable gain and that should leave the market on-track for a weekly reversal from Tuesday’s 3 1/2-month low. To post a weekly reversal requires a close today above 19.37 in the March contract. In a negative story contributing to the early weakness today India’s ISMA forecast their nation’s 2024/25 sugar consumption at 28.0 million tonnes, down 1.5 million tonnes from the 2023/24 season. While there has been a slow start to their 2024/25 sugar production, the drop in domestic consumption may strengthen the case for India to allow sugar exports later this year. The Brazilian Real posted a record low against the Dollar on Thursday before rebounding back into positive territory. A “key” reversal for the Real could ease pressure on Brazil’s Center-South mills to produce sugar for export, and that provided additional support to the sugar market this week. Short-term technical measures like stochastics shifted into a buy mode on Tuesday with yesterday’s sharp range up move and 10 day high also forged on a noted jump in trading volume.

 

Interested in more futures markets?  Explore our Market Dashboards here.

Risk Warning: Investments in Equities, Contracts for Difference (CFDs) in any instrument, Futures, Options, Derivatives and Foreign Exchange can fluctuate in value. Investors should therefore be aware that they may not realise the initial amount invested and may incur additional liabilities. These investments may be subject to above average financial risk of loss. Investors should consider their financial circumstances, investment experience and if it is appropriate to invest. If necessary, seek independent financial advice.

ADM Investor Services International Limited, registered in England No. 2547805, is authorised and regulated by the Financial Conduct Authority [FRN 148474] and is a member of the London Stock Exchange. Registered office: 3rd Floor, The Minster Building, 21 Mincing Lane, London EC3R 7AG.                  

A subsidiary of Archer Daniels Midland Company.

© 2025 ADM Investor Services International Limited.

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.

Latest News & Market Commentary

Explore the latest edition of The Ghost in the Machine

Explore Now