S&P 500 β US Large Cap Index
FTSE 100 β UK Blue Chips
Euro Stoxx 50 β Eurozone Leaders
DAX 40 β German Equities
CAC 40 β French Market Index
Nikkei 225 β Japan Benchmark
Hang Seng β Hong Kong Index
Shanghai Composite β China Mainland
ASX 200 β Australian Market
TSX Composite β Canada Index
Nifty 50 β India Large Cap
STI Index β Singapore Market
KOSPI β South Korea Index
Bovespa β Brazil Equities
JSE Top 40 β South Africa Index
IPC Index β Mexico Market
COTTON & WHEAT down more than 2% π₯ Agricultural commodities have seen a strong wave of gains, driven mainly by supply and logistics concerns. These stem from a combination of worries about fertilizer prices, the security of terminals in the Black Sea, and weather anomalies following El NiΓ±o.
WHEAT (D1) Chart
Source: xStation5 Wednesday, however, brings a correction of the recent gains in agricultural commodities. Coffee, wheat, and cotton contracts are down about 2%. Corn is also posting visible declines. Contract prices are under pressure for several reasons. Overnight from Tuesday to Wednesday, another exchange of fire between Iran and the US could be observed. The market is increasingly pricing in a return to regular military operations, despite assurances from the US administration about shifting to βeconomicβ warfare. The mechanism of the negative impact is fairly complex: unrest involving Iran raises fertilizer and oil prices, which fuels inflation fears. Higher inflation means higher interest rates and yields, which may support the dollar and, at the same time, may put pressure on US exports. Also significant is the pullback toward the average. Many agricultural commodities have risen by double-digit percentages, from the teens to several dozen percent. βOverstretchedβ RSI indicators could, sooner or later, have contributed to profit-taking.
