Hansen: Where next for cotton, coffee, corn and crude?Ole Hansen
With record high supplies, prices in the commodities market have been falling dramatically. Field grown crops have been the most significantly impacted by the increased levels of supply. Corn prices are at a three year low, Arabica coffee is at its lowest price in four years, and cotton is experiencing its longest historical decline since 1979. It is also expected that this year’s soybean harvest could be the fourth largest on record. In general soft commodities are experiencing the most volatile decline.
Overall, only a handful of the 25 commodities were in the black. Most of this support was generated by the energy market.
Influential factors set to further impact the market this week include the release of the US Jobs report and the ECB’s Meeting. Already noticeable is gold’s shifting value due to the rising strength of the dollar. Support for gold between the 1306 to 1293 level, with resistance at 1364.
Refinery’s recent drop in demand has created a surplus of inventory driving WTI crude to a four month low. However, demand is expected to rise over the next few weeks. The gap between WTI and Brent could narrow. With Brent crude stuck between a range of 1.06 to 1.10 trading within that range is anticipated. As a possible new entrant, Libyan oil, could cause the gap between WTI and Brent to shrink.