A roundup of key agricultural commodity markets for the week of Oct. 26-30 by Dow Jones Newswires in London.
GRAINS & OILSEEDS: The surprise presidential election victory of leftist incumbent Luiz Inacio Lula da Silva sparked a sharp weakening in the Brazilian real, making the country's agricultural exports more globally competitive.
Brazil is among the world's largest exporters of coffee, sugar and soybeans, all of which fell following the election result. This week, investors will monitor fluctuations in the real. Challenger Flavio Bolsonaro indicated he would challenge the election result, which could cause further instability.
"A weaker Brazilian real makes Brazilian exports more competitive globally and encourages farmer selling, as producers receive more local currency for their crops," analysts at Peak Trading Research said.
The Federal Reserve's policy decision Wednesday will also hold investor attention, though the central bank is expected to hold rates steady. The market currently prices a 90% likelihood of no change, according to LSEG. Fed Chairman Kevin Warsh's comments will be watched closely, with any hawkish hints likely to buoy the dollar and, in turn, weigh on agricultural commodities.
Speculative traders pulled back from agricultural commodities last week, according to the Commodity Futures Trading Commission's weekly Commitments of Traders report. Expectations for large U.S. corn production weighed on the commodity, Rabobank analysts said.
U.S. weather forecasts are favorable for near-term harvests across the corn belt. South American weather conditions are also favorable for planting of soybeans and corn.
Soybean contracts were 1.55% lower at $12.37 a bushel following the Brazilian election. Wheat futures fell 1.4% in Chicago to $6.16 a bushel in European afternoon trade Monday, while corn futures dropped 0.4% to $4.54 a bushel.
SOFT COMMODITIES:
Coffee and sugar contracts dropped following President Lula's surprise victory. Coffee futures fell 2.75% in New York to $2.99 a pound, while sugar contracts declined 6.5% to 18.92 cents.
Speculators had piled into sugar last week, pushing investors' speculative bets on sugar to a five-year high, Saxo analysts said, leaving the commodity vulnerable to a sharp selloff.
Cocoa futures fell 1.75% to $5,496 a metric ton in New York.
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