Inflation Fears Spur Run-up in Commodities
Soybean futures continue to their strong price surge, with deferred months trading above the $10 per bushel level, as concerns about tight inventories and reports that China will lower import duties have traders in a buying mood. The USDA reported U.S. Soybean export sales totaled 513,600 metric tons for the week ending September 13th, in line with expectations. Dry weather conditions in northern Brazil may affect Soybean plantings, with forecasts calling for the dryness to persist possibly through the early parts of October. With the Soybean harvest about to begin in earnest, there is little sign of harvest pressure selling so far, which is surprising given the relatively high price at which November futures are trading. Support is also found from the rise in overall commodity futures prices, especially with a weak U.S. Dollar and inflation concerns in light of the Fed’s shift in focus from fighting inflation to preventing a weakening of the U.S. economy due to the housing slump. $10 is seen as the next resistance point for November Soybeans, with support found at $9.52 ¾. November Soybeans closed at $9.89, up 18 cents.
Cocoa futures soared to 7-week highs this morning, as continued weakness in the U.S. Dollar against the British Pound and fresh technical buying propelled prices higher. Concern about the spread of Black Pod disease in the West African growing regions was fundamentally supportive to the market. In addition, the December March Spread continues to widen with the December contract now trading at a $25 premium to the March contract, which traders are taking as a sign that near-term demand is strong. An overall rally in commodity prices was also a factor in today’s gains. $1982 is seen resistance for December Cocoa, with support found at $1830. December Cocoa closed at $1971, up $71.
Mike Zarembski, Senior Commodity Analyst
