Breaking News

Agriculture Sector Holds Onto Positive Momentum

By Saxo BankCommoditiesFeb 27, 2014 06:40AM ET
Agriculture Sector Holds Onto Positive Momentum
By Saxo Bank   |  Feb 27, 2014 06:40AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items

The agriculture sector has seen the strongest one-month performance since July 2012, with gains seen across all three sub-sectors of grains, softs and livestock. Agriculture commodity prices are the most exposed to wild weather swings and that has been the key positive price driver so far this year. Coffee, together with sugar, stands out with its double digit gains but also the grain sector — led by soybeans and wheat — have recovered, the latter from a 3.5-year low.

DJ-UBS sector performances
DJ-UBS sector performances

Momentum remains positive across the board, with the DJ UBS Agri Index rallying to a 10-month high. Cotton is one of the two exceptions as its impetus could potentially turn negative today after an exceptionally long period of propulsion that has endured since last November. Support has slipped over news that imports into China — the world's biggest consumer of the fibre — dropped by 36 percent in January from a year earlier, while the US National Cotton Council is projecting an eight percent increase in US planted acreage in 2014.

Momentum on agriculture commodities
Momentum on agriculture commodities

Arabica Coffee has been the strongest performer by far, rising by more than 50 percent in February. However, local government study reports and comments by an eminent exporter have added to market fears that Brazil has suffered significant losses of up to 15 percent of its crop. This is due to the dry and hot weather since December that, the conditions of which have damaged as much as 45 percent of the Arabica beans that will be harvested in May. To stem some of the speculative buying currently supporting the rally, the ICE Futures US exchange on Wednesday raised the initial margin requirements for holding coffee futures to USD 7,200 per contract. This, the sixth consecutive margin increase since mid-November, has so far only had a limited impact on hedge funds involvement. Today, the price is once again challenging the Tuesday high at 181.25 cents/lb.

More than half of the commodities in the table below are currently overbought, and with the month-end approaching some risk of profit-taking may be seen ahead of the weekend. This is apparent not least in the grains markets in which the uptick in the value of the dollar may create some headwind for US exports. Soybeans have been subject to harvest delays in Brazil, where a record crop is still being amassed.

Commodity RSI
Commodity RSI

Agriculture Sector Holds Onto Positive Momentum

Related Articles

Agriculture Sector Holds Onto Positive Momentum

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Are you sure you want to delete this chart?
Write your thoughts here
Replace the attached chart with a new chart ?
Post also to:
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Post 1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
Sign up with Email