By Joe Hoppe

A roundup of key agricultural commodity markets for the week ending Jan. 10 by Dow Jones Newswires in Barcelona.

GRAINS & OILSEEDS: The macro mood is downbeat as China allows its currency to depreciate, ahead of an important week for the agricultural complex.

The depreciation of the yuan makes it more expensive for international buyers to purchase dollar-denominated commodities, including agricultural commodities. The strength of the dollar against key commodity currencies like the Brazilian real and the yuan in recent weeks has damped demand.

The annual commodities index rebalance begins on Wednesday, in which large index funds rebalance their commodity futures holdings for five consecutive trading sessions. Buying is predicted in Chicago and Kansas wheat, feeder cattle and cotton, and selling in coffee and cocoa by Peak Trading analysts.

U.S. nonfarm payroll data and the World Agricultural Supply and Demand Estimates report are also both due on Friday. If the NFP report comes in stronger than expected, the Federal Reserve will be tempted to become more hawkish on the prospect of monetary policy easing, which will further boost the U.S. dollar against commodity currencies.

Meanwhile on the weather front, Argentina forecasts remain warm and dry with only scattered light showers expected this week, bullish for agricultural commodities. Brazil's weather is favorable for crop yield potential, with good rainfall distribution and moderate temperatures.

Export sales were poor last week, with China failing to buy U.S. soybeans for the first time this crop year, Peak Trading analysts say in a note. Demand may recover now that the holiday period is over, though traders will remain acutely aware of expectations of a record crop in Brazil arriving in February, Peak Trading adds.

Chicago wheat futures are up 2.1% at $5.41 a bushel on Monday, while corn is up 1.4% at $4.57 a bushel. Soybean prices are up 1% at $10.01 a bushel.

SOFT COMMODITIES: Coffee and cocoa prices have been volatile in recent trading, with cocoa surging past the $12,000 mark in early December amid concerns over a weaker-than-expected crop in West Africa--home to the biggest producers of cocoa beans--before collapsing back.

Soft commodity prices still remain elevated on adverse conditions in key markets, like the U.S. for cotton and Brazil for coffee and sugar, according to market watchers. That said, positive recent forecasts for global sugar supply have contributed to a more bearish sentiment in the market, BMI analysts say in a note.

Cocoa is down 1.7% at $11,181 a metric ton but has more-than-doubled on year. Coffee is up 0.2% to $3.19 a pound, while sugar is down 1.5% at 19 cents a pound.

Technical factors including low liquidity have also combined with the concerns about West Africa production to push cocoa prices higher, BMI says.

Write to Joe Hoppe at joseph.hoppe@wsj.com

(END) Dow Jones Newswires

January 06, 2025 12:20 ET (17:20 GMT)

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