Agri Commodities Prices Headed Southward

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by Neha Anand

As inflation continues to eat into our hard earned savings, we all could do with cooler commodities prices. And goodness thank that food prices have managed to extend the southward move! Price declines have been witnessed across all the agricultural commodities be it oilseeds, edible oils, grains or softs. International wheat, corn and soybean futures slid as investor fears of an economic downturn and improved sentiment over U.S. crops shifted attention from war disruption to Black Sea exports.

It is to be noted that international Wheat futures has fallen to 4 months low under $10/Bu and are 28% below a 14-year high touched in May. The most-active September wheat contract on the Chicago Board of Trade (CBOT) fell under $9.30 a bushel touching its lowest late February this year. Soybeans, on the other hand, have tanked to over six-week lows. CBoT soybeans dipped under $16 a bushel, while Corn futures are trading around $7.4/Bu, below 10-year highs of $8.12 hit in April with the outlook for US and Russia wheat supplies rising. Raw Sugar futures trading near 1-week lows around18.70 cents a pound. The sweetener is down 10% from highs past 20 cents in early April.

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Meanwhile cotton has tanked in a big, big way, as the fibre sheds 16% in one trading session and drops under 100 cents a pound for most-active December futures. Prices traded limit down on Wednesday, prompting the Intercontinental Exchange Futures (ICE) to expand the daily price limit for cotton futures to 7 cents per pound. Cotton futures extended their selloff into a fourth session, as mounting recession worries dimmed the demand outlook for the natural fiber.

Experts note that Market is seeing a long liquidation by speculators, investors and traders because they fear a recession after Powell’s testimony. Weak Chinese demand and firm dollar index is a double whammy for commodities across the board.

Edible oil complex has witnessed prices tumbling down for a while and the fall is by no means a gentle one. Palm oil prices tumbled below to 4,500-per-tonne level, a level not seen since January and more than 36% below record levels reached in March. Malaysian palm oil futures slumped more than 3% on Friday, on course for their biggest weekly drop since mid-March, as they tracked a plunge in prices of rival soy oil and were weighed down by a rising production outlook. For the week, it is down 16% so far and is eyeing a third straight weekly decline. Indonesia announced an export acceleration scheme to ship at least 1.5 million tonnes of crude palm oil and derivatives. Even rival oil, Rapeseed oil and Sunflower Oil down by over 19% and 14% respectively in span of a month.

CoreCommodity CRB Index fell to an over 6-week low to 316; down 5.5% on month. CoreCommodity CRB Index consists of 19 commodities: Aluminum, Cocoa, Coffee, Copper, Corn, Cotton, Crude Oil, Gold, Heating Oil, Lean Hogs, Live Cattle, Natural Gas, Nickel, Orange Juice, RBOB Gasoline, Silver, Soybeans, Sugar and Wheat. Those commodities are sorted into 4 groups, with different weightings: Energy: 39%, Agriculture: 41%, Precious Metals: 7%, Base/Industrial Metals: 13%. Index tanked amid prospects of bigger global food supplies and rampant exports from world’s biggest shipper of edible oils, signaling global food prices might have reached a peak.

Commodities         Monthly performance
Wheat                       -19%
Palm Oil                    -28%
Canola                      -25%
Cotton                       -21%
Lumber                       -7%
Sugar                          -7%
Corn                            -5%
Soybean                   -5.5%