AGS WEEK AHEAD: Grain Forecasts Turning Optimistic; Traders Eye Falling Brazilian Real
February 11 2019 - 12:00PM
Dow Jones News
By David Hodari
LONDON--A roundup of key agriculture commodities markets for the
week of Feb. 11-15, by WSJ/Dow Jones Newswires commodities
reporters in London.
GRAINS & OILSEEDS
Wheat futures were last down 0.8% at $5.13 a bushel; corn
futures were last down 0.47% at $3.73 a bushel; and soybean futures
were last down 0.9% at $9.07 a bushel.
Prices in each commodity have slipped over the past week, all
accelerating downward after the release of the U.S. Department of
Agriculture's World Agricultural Supply and Demand Estimates. Wheat
took the biggest hit, with the WASDE revising up its forecast for
Russian wheat production.
Still market observers are broadly optimistic about the grain,
with Rabobank "bullish" on wheat, citing lower-than-expected winter
wheat seedlings.
The bank said in a note that it was "neutral" on corn and
soybeans, following the WASDE.
Capital Economics went further, saying "we think that, in many
cases, stocks will start to be drawn down in 2019, which should
give a lift to prices."
COCOA
London cocoa futures were up 1.13% at GBP1,705 a metric ton and
New York futures were up 1% at $2,257 a ton.
While arrivals at Ivorian ports remain strong, London futures
have pushed 4% higher in the past week, with "panic-buying in the
market" as it moves towards a switch in futures contracts according
to one Europe-based trader.
"A few people have been caught short in the spreads and some
people are expecting a repeat of the December-March experience
where March traded at a discount," he said.
The trader said he expected little impact in the cocoa market
from a prospective resumption of a U.S. government shutdown--market
participants will just use London as a guide instead.
COFFEE
Arabica futures were last down 2.6% at $1 a pound and robusta
futures were last down 1% at $1,515 a metric ton.
Futures in both bean varieties have slipped over the past week
despite signals of tightening fundamentals. Rainfall in Brazil's
biggest arabica coffee-growing region measured 55% of the
historical average, and Vietnam's January coffee exports were down
19% on year, according to ED&F Man in a note. Still, warehouse
stocks remain high and the Brazilian real has continued to weaken,
both of which explain the fall, traders said.
SUGAR
Raw sugar futures were last down 0.6% at 12.63 U.S. cents a
pound, having slipped 1.7% in the past week.
A fall in the Brazilian real also appeared to contribute toward
falling sugar prices. That said, West Texas Intermediate oil
futures are "under pressure relative to Brent as the U.S. emerges
as the world's largest oil-and-gas producer," according to Thomas
Kujawa, co-head of softs at Sucden Financial Research. That could
prompt a rise in the amount of cane that is crushed as ethanol
rather than sugar and support prices, though. In that light traders
are waiting for further clues as to whether this will happen, Mr.
Kujawa said.
Write to David Hodari at david.hodari@wsj.com
(END) Dow Jones Newswires
February 11, 2019 11:45 ET (16:45 GMT)
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