By Joe Hoppe
A roundup of key agricultural commodity markets for the week starting Dec. 2 by Dow Jones Newswires in Barcelona.
GRAINS & OILSEEDS: The mood is mixed for agricultural-commodity markets. The dollar stays strong on tariff concerns while demand remains strong.
The stronger dollar after U.S. President-elect Trump's victory is putting pressure on dollar-backed commodities and agricultural currencies like the Brazilian real and the Chinese yuan, weighing on investor sentiment. The greenback strengthened on Monday after Trump said on social media that he would he would impose 100% tariffs on countries that attempt to replace the U.S. dollar as the world's reserve currency.
Markets will be focused on U.S. economic data this week, particularly Friday's nonfarm payroll data. The data will be scrutinized for clues on the Federal Reserve's outlook for monetary policy easing, and the chances of an interest rate cut in December.
U.S. corn export demand is overall strong, a bright spot for the wider grain complex, Peak Trading analysts said in a note. Soybean export sales hit a marketing year high of 2.5 million metric tons last week with continued Chinese buying, though there is some speculation that China is overstocking ahead of potential 2025 tariffs, Peak Trading said.
Black Sea wheat prices have remained weak despite new restrictive Russian export quota announcements.
Meanwhile, South American weather looks favorable. Brazil and Argentina both expect storms this week. North Brazil is turning drier while southern Brazil is seeing excessive moisture that could slow planting or cause localized planting, but production forecasts keep climbing and traders are pricing in a massive soybean crop, Peak Trading wrote.
Seasonal prices tend to be mixed in early December, particularly for the grain and sugar markets, before turning bullish mid-month due to the festive period and investors searching for inflation hedges for the new calendar year.
Chicago wheat futures are up 0.1% at $5.49 a bushel on Monday, while corn is flat on $4.33 a bushel. Soybean prices are down 0.9% on $9.80 a bushel.
SOFT COMMODITIES: Soft commodities have broadly sold off in the week to date. That said, prices remain elevated on adverse conditions in key markets, according to market watchers.
Supply-side concerns largely due to unfavorable weather conditions across soft commodities markets over 2024 have resulted in shifts in market concentrations, BMI analysts said in a note. Lower coffee production in Vietnam have increased reliance on Brazilian supplies, while a high degree of cocoa-production concentration in West Africa has made the market largely dependent on harvest in the area, which has been poor in the past few seasons, BMI analysts said.
Cocoa prices have recently been volatile, swinging between daily gains and losses, but are still up 4.6% on week and more than double on year. Arabica coffee recorded a 47-year high on Nov. 27 on Brazilian production concerns. Despite selling off in Friday and Monday's sessions, it remains up more than 60% on year.
On Monday, cocoa is down 0.3% at $9,378 a metric ton, while coffee is down 0.1% at $2.96 a pound. Sugar is down 0.6% at 21 cents a pound.
Write to Joe Hoppe at joseph.hoppe@wsj.com
(END) Dow Jones Newswires
December 02, 2024 13:03 ET (18:03 GMT)
Copyright (c) 2024 Dow Jones & Company, Inc.
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