By Joe Hoppe
A roundup of key agricultural commodity markets for the week Oct.7-11 by Dow Jones Newswires in Barcelona.
GRAINS & OILSEEDS: The macro mood is mixed, as a stronger dollar following the latest U.S. economic data offsets a risk-on investor attitude toward equities and oil markets.
U.S. Nonfarm Payroll data on Friday surprised to the upside, pushing up the U.S. dollar--a bearish headwind for commodity markets, Peak Trading Research analysts say in a note. The market is now turning its attention to Federal Reserve meeting minutes on Wednesday, Consumer Price Index inflation data on Thursday and the USDA World Agricultural Supply and Demand Estimates report on Friday.
If Thursday's inflation data comes in softer, it would raise hopes for more and greater Fed interest rate cuts and weaken the dollar, boosting key commodity currencies like the Brazilian real.
Meanwhile on the weather front, forecasts point to hot and dry weather in the U.S., the perfect weather for drying and harvesting crops and likely to lead to producer selling pressure.
In South America, much needed rains are forecast to move into northern Brazil over the week. The area is entering monsoon season, and farmers need much more rain over the month to improve ground moisture.
Chicago wheat futures are up 0.4% at $5.92 a bushel on Monday, while corn is flat on $4.25 a bushel. Soybean prices are down 0.5% at $10.33 a bushel.
SOFT COMMODITIES: Agricultural softs have fallen over the past week, as Europe delayed deforestation legislation--though prices still remain elevated on adverse conditions in key markets, like the U.S. for cotton and Brazil for coffee and sugar, according to market watchers.
Cocoa prices are up 66% year to date but are down 1.8% on the month, while coffee is up nearly 30% year to date and 3.5% on the month. Sugar is up nearly 9% year to date and roughly 19% on the month, as drought and increased wildfire incidents have hit output.
In the near term, the European Commission's decision to postpone the application of the EU Deforestation Regulation--announced on October 02 and subject to approval from the European Parliament and Council--could see related soft commodities, such as cocoa and coffee facing headwinds, say analysts from BMI, a unit of Fitch Solutions.
Crude oil prices have spiked more than 11% in the last week on Middle East geopolitical tensions, simultaneously pushing up crude-correlated and seasonally bullish markets like palm oil, bean oil and canola seeds, Peak Trading says.
On Monday, cocoa is down 1% at $6,996 a metric ton, while coffee is down 5.15% at $2.44 a pound. Sugar is down 2.7% at $0.22 a pound.
Write to Joe Hoppe at joseph.hoppe@wsj.com
(END) Dow Jones Newswires
October 07, 2024 11:23 ET (15:23 GMT)
Copyright (c) 2024 Dow Jones & Company, Inc.
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