AGS WEEK AHEAD: Fundamentals Remain Bullish on China Corn Buying, UN Food Prices Remain in Focus

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By Yusuf Khan

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A roundup of key agricultural commodity markets for the week of May 3-6 by Dow Jones Newswires in London.

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GRAINS & OILSEEDS

Strong buying from China and poor weather in the US is likely to help keep grain prices bullish this week, despite a weakening macro environment.

In the US, wet weather is causing delays to planting–the USDA has estimated that about 14% of planned corn acreage has been planted, which according to ANZ Research is about half of the average of recent years.

Chinese corn demand has also been strong, helping to keep prices higher, alongside the fact that “Brazil’s Safrinha corn crops are likely to be sitting in increasingly dry soils after the next week or so.”

The UN Food and Agricultural Organization’s food price index is expected to be updated on May 6 and will be the key focus for the week. In April, prices hit a new record on worries over supply from the black sea for grains and oil seeds.

Wheat prices picked up at the start of the week, moving up 0.7% in Chicago to $10.62 a bushel on Tuesday. Corn followed similarly, rising 0.6% to $8.08 a bushel.

SOFT COMMODITIES

Strong production figures in India is helping to add a bearish sentiment to sugar prices, with prices softening at the start of the week.

“If you take opening stocks at 8.5 million metric tons, and 36.0 million tons production, and deduct 27.5 consumption, you are left with 17 million tons. And since the monsoon is more or less in the bag, and the government can expect an equally good crop next year, they should be more worried about having to subsidise exports in some devious way next year, than being left with insufficient stock next year,” Marex’s Robin Shaw said in a note.

New York-trade coffee futures rose 0.7% early trading on Tuesday to $2.18 a pound. Raw sugar futures edged down 0.9% to 19 cents a pound. Cocoa futures moved 0.6% higher to $2,619 a metric ton.

Write to Yusuf Khan at [email protected]

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Credit: www.marketwatch.com /

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