Barcelona, Feb. 5-9

The agricultural commodity markets experienced a downturn as a result of the stronger-than-expected U.S. jobs report, which led to an increase in the value of the dollar. Consequently, commodity and energy markets faced downward pressure. Analysts predict that the upcoming CPI inflation data on Feb. 13 will serve as a crucial macro-level catalyst.

Traders will closely monitor the U.S. World Agricultural Supply and Demand Estimates report, which is scheduled to be released on Thursday. However, their focus will quickly shift to the Agriculture Department’s annual agricultural outlook forum on Feb. 15-16. During this event, Peak Trading Research expects to present the first glimpse of the 2024-25 balance sheets.

Weather conditions in South America are currently uncertain, especially with regard to soybean harvesting in Brazil and production in Argentina. According to analysts at a leading research firm, Brazilian forecasts indicate scattered showers, which are favorable for bean harvesting. On the other hand, Argentina is experiencing hot and dry weather, although extended forecasts suggest that rain is expected over the upcoming weekend.

The ongoing attacks on ships in the Red Sea have also impacted grain and oilseeds futures. Producers from the U.S. and Europe have had to reduce prices to compensate for higher freight costs resulting from these attacks, as per Rabobank analysts.

Soft Commodities Outperform G&O Markets in 2024

2024 started with a notable contrast between the performance of soft commodities and the grains and oilseeds (G&O) markets. While soft commodities saw an average increase of 10%, G&O markets experienced a decline of 3.5%, according to analysts.

G&O Market Update

As of Monday, Chicago wheat futures are down 0.8% at $5.95 per bushel, while corn has decreased by 0.4% to $4.41 per bushel. Soybean prices have also dropped by 0.5% to $11.83 per bushel.

Focus on Soft Commodities

Traders are closely monitoring several factors that impact the soft commodities market. These include weather conditions in West Africa, Brazilian exports, and trade tensions in the Red Sea. Market analysts suggest that these factors have generally had a bullish effect on the soft commodities complex, with cocoa and robusta coffee being particularly favored.

Cocoa Continues to Rise

Persistent concerns surrounding supply, largely caused by adverse weather conditions in West Africa, have contributed to cocoa futures trading at significantly higher prices. Market watchers expect this upward pressure to continue in the upcoming months.

Sugar Faces Constraints

While robust export volumes from Brazil have limited further increases in sugar prices, analysts predict that Brazilian sugar exports may face constraints from March through September. These potential shifts in export volumes could impact sugar prices.

Current Soft Commodities Prices

As of Monday, cocoa is up 2.2% at $5,119 per metric ton, while sugar is down 0.5% at $0.24 per pound. Coffee prices have also declined, currently standing at $1.90 per pound.

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