By Giulia Petroni
A roundup of key agricultural commodity markets for the week starting Dec. 16 by Dow Jones Newswires in Barcelona.
GRAINS & OILSEEDS: The mood has turned more bearish ahead of the Federal Reserve's monetary policy decision on Wednesday.
The U.S. central bank is widely expected to cut rates by 25 basis points, but even more important for traders will be Fed Chair Jerome Powell's press conference for cues on the path of interest rates next year. "A more dovish tone from Powell this week would weaken the dollar and give bullish December seasonals more traction," analysts at Peak Trading Research said in a note to clients.
Meanwhile, South American weather is generally favorable. While southern Brazil is experiencing significant rainfall, northern Brazil is dry. Most importantly, Mato Grosso--a key state in west-central Brazil--will see some rain through the end of the year, according to market watchers. In Argentina, corn and soybean planting is well underway, and the country is also benefiting from rains this week.
Seasonal prices are bullish through the end of December, as investors tend to buy commodities as inflation hedges for the new calendar year. "Santa Rally! This is one of the best times of the year to buy dips in seasonally bullish markets like corn, cattle, cotton, sugar No. 11, Matif rapeseeds, Brent Crude oil, and gasoline," the analysts said.
Chicago wheat futures rise 0.3% at $5.54 a bushel on Monday, while corn is up 0.6% at $4.45 a bushel. Soybean prices are down 0.1% at $9.87 a bushel.
SOFT COMMODITIES: Cocoa prices jumped on faltering expectations of a surplus and growing concerns that dry weather might negatively affect the mid-season crop, according to Rabobank analysts. Price volatility is also intensified by low cocoa stock levels and low open interests, which mean there is less liquidity and more sensitivity to market changes. Meanwhile, speculators are betting on further price increases. "Non-commercials bought 2,761 net lots to a 22,273 net long position--the largest net long position since March 2024," the analysts said.
Coffee prices have also climbed significantly, and are currently up roughly 74% year-to-date. Last week, Arabica prices hit their highest ever level, beating a prior record set in 1977, due to global supply worries caused by drought and high temperatures. Traders are worried about the 2025 harvest in Brazil, as the South American producer had its worst drought in 70 years in August and September, swiftly followed by heavy rains in October.
Cocoa is up 3.8% at $11,732 a metric ton, while coffee rises 2.5% at $3.28 a pound. Meanwhile, sugar is down 0.1% at 21 cents a pound.
Write to Giulia Petroni at giulia.petroni@wsj.com
(END) Dow Jones Newswires
December 16, 2024 11:55 ET (16:55 GMT)
Copyright (c) 2024 Dow Jones & Company, Inc.
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